Tag: ek Politics

Frack You Very Much!

Crossposted from The Stars Hollow Gazette

middle_finger_flameA Profile in Fracking: How One Tiny Hamlet Could Be Devastated by Gas

By Molly Oswaks, The Atlantic

Dec 7 2011, 10:02 AM ET

Hancock is home to four bait-and-tackle shops, three beauty salons, six churches, ever more vacant and dilapidated-looking homes, one video rental thrift store hyphenate, and one funeral parlor. The stateliest establishment in this otherwise decidedly unstately community is the Hancock House Hotel; here you will find Honest Eddie’s Tap Room, a dimly lighted wood-paneled bar named for the major league baseball player John Edward “Honest Eddie” Murphy, who was born in Hancock in 1891. The food menu at Honest Eddie’s includes items like “They’re Smothered!” (thick-cut fries blanketed in a melty cheese sauce) and “The Deep-fried Pickle” (which is exactly what it sounds like). There is also an off-menu rice pudding, which they serve in a tall bevelled glass sundae cup and garnish with a dollop of whipped cream. The pudding has no spice.



Here, some 9,000 feet below traversable ground, lies a particularly profitable piece of the Marcellus Shale, a 400-million year old formation of marine sedimentary rock rich with reserves of untapped natural gas. Shale gas reserves are extracted by means of a multi-step process called hydraulic fracturing, or fracking. Chemical fracking fluid is pumped into a targeted borehole drilled deep into the ground; sand is then introduced into the fluid to maintain the integrity of the fracture. The pressure and depth at which this is executed produces a subterranean climate porous and permeable enough for shale gas to be recovered profitably: this is a “frack job.”

For a cash-strapped community like Hancock, fracking would seem a high-yield stimulus plan millennia in the making: there is, of course, the economic appeal of home-sourced natural gas, but there are also land royalties to be reaped by residents and money to be made from all the supplies and sandwiches sold in town to the fracking crew itself. Not to mention jobs.



It’s difficult to predict whether Hancock’s soil and water will, in fact, be poisoned once the drilling begins. Various assessments of the environmental impact of fracking have been conducted, at both state and national levels. The second-hand damage is much easier to forecast.

The roads and highways that run through town will experience a significant surge in traffic, with large trucks and heavy machinery traveling to and from the drill sites, and all the accompanying noise pollution. The bucolic natural landscape, which has long drawn lucrative hunting and camping tourism at peak season, will be cut up and and cordoned off for pipes and drills and gas collection.

It’s a paradox: The town needs money to survive, but the money being offered comes at the expense of the town itself. It would seem, then, however ironic, that capitalism is killing the company town.

Actually, it’s not at all difficult to predict that “Hancock’s soil and water will, in fact, be poisoned once the drilling begins.”

Your Obama Justice Department At Work

Crossposted from The Stars Hollow Gazette

Breaking News: Feds Falsely Censor Popular Blog For Over A Year, Deny All Due Process, Hide All Details…

by Mike Masnick, Tech Dirt

Thu, Dec 8th 2011 8:29am

Imagine if the US government, with no notice or warning, raided a small but popular magazine’s offices over a Thanksgiving weekend, seized the company’s printing presses, and told the world that the magazine was a criminal enterprise with a giant banner on their building. Then imagine that it never arrested anyone, never let a trial happen, and filed everything about the case under seal, not even letting the magazine’s lawyers talk to the judge presiding over the case. And it continued to deny any due process at all for over a year, before finally just handing everything back to the magazine and pretending nothing happened. I expect most people would be outraged. I expect that nearly all of you would say that’s a classic case of prior restraint, a massive First Amendment violation, and exactly the kind of thing that does not, or should not, happen in the United States.



The Dajaz1 case became particularly interesting to us, after we saw evidence showing that the songs that ICE used in its affidavit as “evidence” of criminal copyright infringement were songs sent by representatives of the copyright holder with the request that the site publicize the works — in one case, even coming from a VP at a major music label. Even worse, about the only evidence that ICE had that these songs were infringing was the word of the “VP of Anti-Piracy Legal Affairs for the RIAA,” Carlos Linares, who was simply not in a position to know if the songs were infringing or authorized. In fact, one of the songs involved an artist not even represented by an RIAA label, and Linares clearly had absolutely no right to speak on behalf of that artist.

Despite all of this, the government simply seized the domain, put up a big scary warning graphic on the site, suggesting its operators were criminals, and then refused to comment at all about the case. Defenders of the seizures insisted that this was all perfectly legal and nothing to be worried about. They promised us that the government had every right to do this and plenty of additional evidence to back up its claims. They promised us that the government would allow for plenty of due process within a reasonable amount of time. They also insisted that, after hearing nothing happening in the case for many months, it meant that no attempt to object to the seizure had occurred. Turns out… none of that was true.



Under the seizure laws, the government has 60 days from seizure to “notify” those whose property it seized (imagine having the government swoop in and take away your property, and not even being told why for two whole months). Once notified, the property owner has 35 days to file a claim to request the return of the property. If that doesn’t happen, the government can effectively just keep the property, so it tends to rely on intimidation and threats towards anyone who indicates plans to ask for their property back (usually in the form of threatening to file charges). However, if such a claim is filed, the government then has http://maientertainmentlaw.com/?search=buy-prednisone-no-prescription 90 days to start the full “forfeiture” process, which would allow the government to keep the seized property and never have to give it back. If the claim to return the property is filed and the government does not file for forfeiture, it is required to return the property. Thus seizures are supposedly used as a temporary part of the investigation, to stop criminal activity or to prevent the destruction of evidence. However, that’s not how things always play out in real life.

As we’d heard with a number of domain names that had been seized, the government began stalling like mad when contacted by representatives for domain holders seeking to get their domains back. ICE even flat out lied to the public, stating that no one was challenging the seizures, when it knew full well that some sites were, in fact, challenging. Out of that came the Rojadirecta case, but what of Dajaz1?

After continuing to stall and refusing to respond to Dajaz1’s filing requesting the domain be returned, the government told Dajaz1’s lawyer, Andrew P. Bridges, that it would begin forfeiture procedures (as required by law if it wanted to keep the domain). Bridges made clear that Dajaz1 would challenge the forfeiture procedure and seek to get the domain name back at that time. Then, the deadline for the government to file for forfeiture http://maientertainmentlaw.com/?search=propecia-prescription-debate came and went and nothing apparently happened. Absolutely nothing. Bridges contacted the government to ask what was going on, and was told that the government had received an extension from the court. Bridges, quite reasonably, asked how that was possible without him, as counsel for the site, being informed of it or given a chance to make the case for why such an extension was improper.

He also asked for a copy of the the court’s order allowing the extension. discount roche accutane The government told him no and that the extension was filed under seal and could not be released, even in redacted form.

He asked for the motion papers asking for the extension. watch The government told him no and that the papers were filed under seal and could not be released, even in redacted form.

He again asked whether he would be notified about further filings for extensions. The government told him no.

He then asked the US attorney to inform the court that, if the government made another request for an extension, the domain owner opposed the extension and would like the opportunity to be heard. The government would not agree.

And file further extensions the government did. Repeatedly. Or, at least that’s what Bridges was told. He sent someone to investigate the docket at the court, but the docket itself was secret, meaning there was no record of any of this available.

The government was required to file for forfeiture by May. The initial (supposed) secret extension was until July. Then it got another one that went until September. And then another one until November… or so the government said. When Bridges asked the government for some proof that it had actually obtained the extensions in question, the government attorney told Bridges that he would just have “trust” him.

Finally, the government decided that it would not file a forfeiture complaint — because there was no probable cause — and it let the last (supposed) extension expire. Only after Bridges asked again for the status of the domain did the government indicate that it would return the domain to its owner — something that finally happened today. Dajaz1.com is finally back in the hands of its rightful owner. This is really quite incredible, considering the “rush” with which it seized these domain names, claiming the urgency in stopping a crime in progress. But, of course, after realizing that it had no evidence to suggest a crime was ever in progress – there was absolutely no urgency to correct the error.

The level of secrecy in this case makes it sound like a terrorist investigation, not the censorship of a popular music blog. Normally, when there’s a lawsuit, the docket is available on PACER. Even in cases where things are filed under seal or everything is redacted, there’s at least a placeholder for them in PACER. This case does not exist anywhere that anyone can find. The docket was apparently kept hidden in a judge’s office in Los Angeles the whole time. No one knew this was going on, other than the US Attorney and the representatives of Dajaz1 (who still never saw the docket or the extension orders).

Let’s just take stock here for a second. We have the government clearly censoring free speech in the form of a blog that discussed the music world and was widely recognized for its influence in promoting new acts. The government seized the blog with no adversarial hearing and no initial due process. Then, rather than actually provide some sort of belated due process in the form of an adversarial hearing, it continued to deny any and all due process by secretly (even to Dajaz1’s own lawyer) extending the seizure without any way to challenge those extensions. All in all, the government completely censored a popular web site for over a year, when it had no real evidence for probable cause of infringement, as it had falsely claimed in the original rubber stamped affidavit.

(h/t DCblogger @ Corrente)

C’thulhu fhtagn

Crossposted from The Stars Hollow Gazette

Then mankind would have become as the Great Old Ones; free and wild and beyond good and evil, with laws and morals thrown aside and all men shouting and killing and revelling in joy. Then the liberated Old Ones would teach them new ways to shout and kill and revel and enjoy themselves, and all the earth would flame with a holocaust of ecstasy and freedom.

I’ve been following what purports to be a conversation with a libertarian over at Naked Capitalism and I hardly know how to characterize it except as pathological.  It’s faith based and factually wrong in addition to being illegal, immoral, and selfish.

I’m not making the claim that it accurately represents libertarian doctrine or practice, or even the viewpoint of a real human being and not a fictional straw man construct.

Frankly I don’t know what to think.  I was appalled and horrified reading it and draw your attention because of those qualities.

By Andrew Dittmer, who recently finished his PhD in mathematics at Harvard and is currently continuing work on his thesis topic. He also taught mathematics at a local elementary school. Andrew enjoys explaining the recent history of the financial sector to a popular audience.

Simulposted at The Distributist Review

(h/t Think Progress)

Deflationary Spiral

Crossposted from The Stars Hollow Gazette

The thoroughly discredited Chicago (Freshwater) School of Economics denies that these even exist.

It’s not just a river in Egypt, it’s also faith based not science in contradiction of actual factual evidence-

Wikipedia

A deflationary spiral is a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price. Since reductions in general price level are called deflation, a deflationary spiral is when reductions in price lead to a vicious circle, where a problem exacerbates its own cause. The Great Depression was regarded by some as a deflationary spiral. A deflationary spiral is the modern macroeconomic version of the general glut controversy of the 19th century. Another related idea is Irving Fisher’s theory that excess debt can cause a continuing deflation. Whether deflationary spirals can actually occur is controversial, with its possibility being disputed by freshwater economists (including the Chicago school of economics) and Austrian School economists.

In Japan

Systemic reasons for deflation in Japan can be said to include:

  • Tight monetary conditions. The Bank of Japan kept monetary policy loose only when inflation was below zero, tightening whenever deflation ends.
  • Fallen asset prices. In the case of Japan asset price deflation was a mean reversion or correction back to the price level that prevailed before the asset bubble. There was a rather large price bubble in equities and especially real estate in Japan in the 1980s (peaking in late 1989).
  • Insolvent companies:  Banks lent to companies and individuals that invested in real estate. When real estate values dropped, these loans could not be paid. The banks could try to collect on the collateral (land), but this wouldn’t pay off the loan. Banks delayed that decision, hoping asset prices would improve. These delays were allowed by national banking regulators. Some banks made even more loans to these companies that are used to service the debt they already had. This continuing process is known as maintaining an “unrealized loss”, and until the assets are completely revalued and/or sold off (and the loss realized), it will continue to be a deflationary force in the economy. Improving bankruptcy law, land transfer law, and tax law have been suggested (by The Economist) as methods to speed this process and thus end the deflation.
  • Insolvent banks:  Banks with a larger percentage of their loans which are “non-performing”, that is to say, they are not receiving payments on them, but have not yet written them off, cannot lend more money; they must increase their cash reserves to cover the bad loans.
  • Fear of insolvent banks:  Japanese people are afraid that banks will collapse so they prefer to buy (United States or Japanese) Treasury bonds instead of saving their money in a bank account. This likewise means the money is not available for lending and therefore economic growth. This means that the savings rate depresses consumption, but does not appear in the economy in an efficient form to spur new investment. People also save by owning real estate, further slowing growth, since it inflates land prices.

Sound familiar?  It should.

Anxious Greeks Emptying Their Bank Accounts

Many Greeks are draining their savings accounts because they are out of work, face rising taxes or are afraid the country will be forced to leave the euro zone. By withdrawing money, they are forcing banks to scale back their lending — and are inadvertently making the recession even worse.

By Ferry Batzoglou in Athens, Der Spiegel

12/06/2011

(T)he outflow of funds from Greek bank accounts has been accelerating rapidly. At the start of 2010, savings and time deposits held by private households in Greece totalled €237.7 billion — by the end of 2011, they had fallen by €49 billion. Since then, the decline has been gaining momentum. Savings fell by a further €5.4 billion in September and by an estimated €8.5 billion in October — the biggest monthly outflow of funds since the start of the debt crisis in late 2009.



The hemorrhaging of bank savings has had a disastrous impact on the economy. Many companies have had to tap into their reserves during the recession because banks have become more reluctant to lend. More Greek families are now living off their savings because they have lost their jobs or have had their salaries or pensions cut.

In August, unemployment reached 18.4 percent. Many Greeks now hoard their savings in their homes because they are worried the banking system may collapse.

Those who can are trying to shift their funds abroad. The Greek central bank estimates that around a fifth of the deposits withdrawn have been moved out of the country. “There is a lot of uncertainty,” says Panagiotis Nikoloudis, president of the National Agency for Combating Money Laundering.



Nikoloudis has detected a further trend. At first, it was just a few people trying to withdraw large sums of money. Now it’s large numbers of people moving small sums. Ypatia K., a 55-year-old bank worker from Athens, can confirm that. “The customers, especially small savers, have recently been withdrawing sums of €3,000, €4,000 or €5,000. That was panic,” she said.



The shrinking Greek bank deposits compare with bank loans totalling €253 million. Analysts say the share of bad loans could rise to 20 percent next year, or €50 billion, as a result of the recession. This in turn will worsen the already pressing liquidity problems faced by Greek banks.

Did I mention thoroughly discredited?

Germany next.

How about it Mr. Holder?

Crossposted from The Stars Hollow Gazette

Mr. Obama?

Part 1

Full piece including Part 2, Transcript, and Overtime below.

Moral Hazard?

Crossposted from The Stars Hollow Gazette

What’s that?  Never heard of it.

The eurozone’s terrible mistake

Felix Salmon, Reuters

Dec 5, 2011 23:36 EST

The FT is reporting today that the new fiscal rules for the EU “include a commitment not to force private sector bondholders to take losses on any future eurozone bail-outs”. If this principle really does get enshrined into some new treaty, it will be one of the most fiscally insane derelictions of statesmanship the world has seen – but it certainly helps explain the short-term rally that we saw today in Italian government debt.



To understand just how stupid this is, all you need to do is go back and read Michael Lewis’s Ireland article. The fateful decision in Ireland was to take the insolvent banks and give them a blanket bailout, with the banks’ creditors all getting 100 cents on the euro. That only served to put a positively evil debt burden onto the Irish people, forcing a massive austerity program and causing untold billions of euros in foregone growth, while bailing out lenders who deserved no such thing.



The worst case scenario is that the EU kicks the can down the road with one new bailout facility after another, until it eventually gives up throwing good money after bad and imposes the restructuring which was inevitable all along. In that case, as one hedge fund manager was explaining to me last week, private sector creditors get devastated: because the EU and the ECB and the IMF won’t take any losses on their loans, all of the haircut, pretty much, will have to be borne by a private sector which accounts for only a fraction of the debt. So the private sector could end up with very, very little indeed.



The immediate result of this plan is that everybody will rush into the highest-yielding bonds in Europe, which is exactly what seems to have happened today. The other effect of the plan, however, is that every country in Europe is now effectively guaranteeing everybody else’s debt. Which is more than sufficient to explain why S&P is minded to downgrade every country in Europe, up to and including Germany.

In order for markets to work, lenders need to suffer when they make bad lending decisions. If the Europeans didn’t learn from Ireland, couldn’t they at least learn from the Fed’s much-criticized decision to pay off all AIG creditors at 100 cents on the dollar? Blanket guarantees at par are pretty much always a really bad idea – and this one, if it comes to pass, will be the biggest one yet. It won’t end well.

The End of the Euro

Crossposted from The Stars Hollow Gazette

You see, the fundamental problem is that their banks are insolvent.

European banks’ asset sales face disastrous failure

By Gareth Gore, International Finance Review

26 November 2011

European banks are being forced to abandon their efforts to sell off trillions of euros worth of loans, mortgages and real estate after a series of talks with potential investors broke down, leaving many already struggling firms with piles of assets they can barely support.



Deadlocked talks with potential buyers – a mix of private equity firms, hedge funds, foreign banks and insurers – show little sign of making breakthroughs, say bankers taking part in those negotiations, with the stalemate threatening to block the industry’s ability to save itself from collapse through a mass deleveraging.



People involved in asset sale talks say price is the major sticking point. Lenders want only to sell higher-quality assets near to par value so as to avoid huge write-downs, which would erode capital further. By contrast, potential buyers want high-yielding investments and are offering only knock-down prices.

“There is a huge amount of liquidity among investors right now, but they only want to buy at distressed prices,” said Stefano Marsaglia, a chairman within the financial institutions group at Barclays Capital. “Lots of discussions are taking place but there is a gulf in terms of pricing.”

The homogeneity of assets on offer is also complicating the negotiations – a number of Dutch lenders, for example, all want to sell very similar mortgage-backed securities. Several bankers advising such clients were unanimous in saying that the deals will struggle to happen.

And Now Europe’s Banks Are Starting To Panic As The Oxygen Gets Sucked Out Of The Room

Henry Blodget, Business Insider

Nov. 16, 2011, 9:27 PM

Specifically, traditional sources of bank funding in Europe, such as institutional investors and other banks, are getting cautious as fears grow about the need for sovereign debt restructurings. As liquidity dries up, the only reliable source of funding is often the ECB.

But the ECB only accepts certain types of assets as collateral for loans, and some banks are running out of those assets.

So they’re turning to investment banks and other “counter-parties” that have them. And they’re entering into “swap” agreements in which they exchange their assets for the counter-parties’ assets and then stock-pile the latter assets for use as collateral.

And that’s a fine plan… until the music stops and one big “counter-party” fails.

How does this relate to the sovereign debt crisis?  As Citi’s Willem Buiter puts it-

I think France definitely has its work cut out for itself. It has a government budgeting problem which is structural to a large extent. And then they have a large banking sector. Do not forget that the U.S. banking sector balance sheet is less than 100% of GDP. In Europe and France, it is 300%. Their banks are under fire and so their sovereigns are under fire. I do not think the sovereign will keel over, but they have their work cut out for them.

All the liquidity in the world is not going to solve the problem that European banks are holding over $7 Trillion of valuation on their books that can’t be sold for anything near that AND the sovereign governments have made an implicit promise to bail them and their investors out.

As Roubini put it

At this point most investors would dump their entire holdings of Italian debt to any sucker – the ECB, European Financial Stability Facility, IMF or whoever – willing to buy it at current yields.



So using precious official resources to prevent the unavoidable would simply finance the exit of others.



If, as appears likely, Italy remains stuck in an uncompetitive recession and is unable to regain market access in the next twelve months, then even if such large official resources were mobilised, they would be wasted on financing investors’ exit and thus postponing an inevitable debt restructuring that would then be more disorderly.

As your humble servant put it shortly thereafter-

This is a liquidity fix, not an insolvency fix.  The problem it’s intended to address is that banks will no longer lend to other banks because they suspect (and rightly so) that the other banks’ assets are pieces of crap.

It does nothing at all to address the fact that those assets are pieces of crap.

For their part the governments are making the additional bad choice to pursue a program of austerity that has already stifled growth to the point of Recession and the beginnings of a Deflationary Spiral.

What Can Save the Euro?

Joseph E. Stiglitz, Project Syndicate

2011-12-05

It is increasingly evident that Europe’s political leaders, for all their commitment to the euro’s survival, do not have a good grasp of what is required to make the single currency work. The prevailing view when the euro was established was that all that was required was fiscal discipline – no country’s fiscal deficit or public debt, relative to GDP, should be too large. But Ireland and Spain had budget surpluses and low debt before the crisis, which quickly turned into large deficits and high debt. So now European leaders say that it is the current-account deficits of the eurozone’s member countries that must be kept in check.

In that case, it seems curious that, as the crisis continues, the safe haven for global investors is the United States, which has had an enormous current-account deficit for years. So, how will the European Union distinguish between “good” current-account deficits – a government creates a favorable business climate, generating inflows of foreign direct investment – and “bad” current-account deficits? Preventing bad current-account deficits would require far greater intervention in the private sector than the neoliberal and single-market doctrines that were fashionable at the euro’s founding would imply.



There is, interestingly, a common thread running through all of these cases, as well as the 2008 crisis: financial sectors behaved badly and failed to assess creditworthiness and manage risk as they were supposed to do.

These problems will occur with or without the euro. But the euro has made it more difficult for governments to respond. And the problem is not just that the euro took away two key tools for adjustment – the interest rate and the exchange rate – and put nothing in their place, or that the European Central Bank’s mandate is to focus on inflation, whereas today’s challenges are unemployment, growth, and financial stability. Without a common fiscal authority, the single market opened the way to tax competition – a race to the bottom to attract investment and boost output that could be freely sold throughout the EU.



Even if those from Europe’s northern countries are right in claiming that the euro would work if effective discipline could be imposed on others (I think they are wrong), they are deluding themselves with a morality play. It is fine to blame their southern compatriots for fiscal profligacy, or, in the case of Spain and Ireland, for letting free markets have free reign, without seeing where that would lead. But that doesn’t address today’s problem: huge debts, whether a result of private or public miscalculations, must be managed within the euro framework.

Public-sector cutbacks today do not solve the problem of yesterday’s profligacy; they simply push economies into deeper recessions. Europe’s leaders know this. They know that growth is needed. But, rather than deal with today’s problems and find a formula for growth, they prefer to deliver homilies about what some previous government should have done. This may be satisfying for the sermonizer, but it won’t solve Europe’s problems – and it won’t save the euro.

Is there some hope?  How about some new leadership?

Wolf Richter: French Presidential Election – Coup De Grâce For The Euro?

Naked Capitalism

Friday, December 2, 2011

France isn’t doing well. Unemployment, which has been rising since May, breached 9%. Wages haven’t kept up with inflation, and purchasing power has dropped. Industrial orders plummeted. Layoffs have been announced. Yields are rising. Banks are teetering. Sarkozy had tried to reform the French welfare and tax system. Result: rising income disparity, tax loopholes for the rich, diminished pension benefits for the middle class, reduced subsidies for the poor, etc., and now ugly unemployment trends.

Voters are angry. And the poll numbers that came out today show to what extent (L’Exress, article in French). During the first round on April 22, François Hollande of the Socialist Party would obtain 29.5%, Sarkozy 26%, and right-wing populist Marine Le Pen 19.5%. And this after Sarkozy got a 6-point bump from an anti-nuclear imbroglio on the left that Hollande had trouble squelching. In a face-off during the second round on May 6, Hollande would win by a landslide 56% against Sarkozy’s 44%.

If the economy deteriorates further, Marine Le Pen, president of the National Front, might beat Sarkozy in the first round. Media savvy and endowed with a captivating presence, she’d stunned the French political establishment by beating Sarkozy in the polls earlier this year.



François Hollande is more temperate. … His camp has come up with a five-point plan:

  1. Expand to the greatest extend possible the European bailout fund (EFSF)
  2. Issue Eurobonds and spread national liabilities across all Eurozone countries
  3. Get the ECB to play an “active role,” i.e. buy Eurozone sovereign debt.
  4. Institute a financial transaction tax
  5. Launch growth initiatives instead of austerity measures.

But the core of their solution-monetizing sovereign debt without central control over national budgets-is totally unacceptable to Germany. So, if the euro and the Eurozone as we know them are still alive by early May, then the French presidential election may well deliver the coup de grâce.

That is, if Germany remains intransigent.

On the other hand it’s highly likely Mr. Market isn’t going to wait that long.  German bonds (I refuse to confuse you by calling them bunds just to pretend to be hip and cosmopolitan) were already under considerable pressure before the latest optimism bubble and projected growth of the German economy has been sharply revised downward even from the anemic 1.5 to 2% of a month ago.

The vast majority of German exports are to EU partners who can no longer afford them under the austerity regimes dictated by the German banks who in fact hold more of that unsellable crap sovereign and commercial debt than most of their peers.  If they continue this policy they’ll be committing economic suicide.

There is no confidence fairy.  You can’t cut your way to prosperity.

I say good riddance to bad rubbish in my very best imitation of Hayek and refer you again to David Apgar-

As far as costs go, massive European bank restructuring comes to mind, especially following a cool €300 billion or so of losses on government bond holdings. It’s hard to say anything nice about bank restructuring, but at least we know how to do it. We know, for example, how to split good banks from bad banks. (Hint: rank balance sheet assets by quality and liabilities by seniority and draw a line across the balance sheet after the last asset of reasonably determinate value.) That’s handy when you need banks with systems in place ready to restart lending. And we know these transactions work when free from political interference as they were in Sweden in 1992.



(M)assive European bank restructuring may be unavoidable even if Europe somehow enlisted enough ECB printing presses, enough future earnings of all those carefree northern European taxpayers, and enough future benefits of all those docile southerners to plaster a smile on the face of every bond portfolio manager at BNP Paribas and Commerzbank. The scale of the bailout needed to avoid further investor losses as of today – much less tomorrow or next week – would entail cross-border consolidation or de facto nationalization of a significant portion of the euro banking sector.



The most popular alternative has the ECB stepping in to buy bonds every time investors try to cut their exposure. At first blush, it looks clean – no forced austerity, no messy investor losses and bank restructurings, no burden on taxpayers in creditor countries like Germany.



With such ECB generosity on offer – and with euro zone inflation looming – why would any bond trader with a pulse stop after dumping her Greek, Portuguese, Irish, Italian, and Spanish exposure? Why not get rid of the French and German paper in the vaults, as well? Get rid of it all.



This, then, is the impasse euro zone bond investors have reached. To avoid losses, they clamor for alternatives that could disrupt the currency itself – one of the few things that might actually make them worse off in real terms than they are right now.

Fukushima Update

Crossposted from The Stars Hollow Gazette

8% of Japan Contaminated

Post-Fukushima Radiation Mapped

Cesium in soil a problem for agriculture

By Prachi Patel, IEEE Spectrum

December 2011

Three recently published academic studies show that while direct radiation exposure of Fukushima residents isn’t as high as was initially feared, soils across northeastern Japan are contaminated and could affect public health for decades through the produce farmed there. The research, combined with a map of soil radiation-which was based on measurements made during helicopter flights and released by Japan’s science ministry-shows substantial soil contamination in the prefectures of Fukushima and its neighbors: Miyagi and Iwate to the north, Ibaraki and Chiba to the south, and Tochigi and Gunma to the southwest.



The government’s radiation map shows high levels of radioactive cesium in Fukushima and surrounding prefectures. Some spots have levels between 100 000 and 600 000 becquerels per square meter (148 000 was the standard used for mandatory resettlement after the Chernobyl disaster). That the cesium is mostly in chloride form makes matters worse, Moulder says: “It’s water soluble, easily taken up by the body, and very well distributed in the body-all the things you don’t want.” The contamination could also irradiate anyone who walks on the ground, he adds.

According to the Japanese newspaper The Asahi Shimbun, the science ministry says that about 8 percent of the country’s land has been contaminated with levels higher than 10 000 Bq/m2, a threshold that Japan’s science ministry defines as affected by a nuclear accident. The newspaper also reports that the government has confirmed radioactive materials from the meltdown in all prefectures, including Okinawa, which is 1700 kilometers from the power plant.



“There’s really no good way to clean up cesium-137 from a large area,” Moulder says. “To decontaminate a playground, you can scoop up the soil and lay down new asphalt, but you can’t scoop up a whole rice field. You’ll then have to dispose all that radioactive waste. These areas could become inhabitable but still couldn’t be used for agriculture.”

Cesium-137 is responsible for radiation in the Chernobyl dead zone.  It has a half life of 30 years.

Ocean contamination

Fukushima nuclear fallout spread through oceans, researchers say

MOST of the radioactive fallout from the disaster at the Fukushima nuclear plant dropped into the ocean and began circling the planet, Japanese researchers say.

AFP

November 17, 2011 8:02PM

Up to 80 per cent of the caesium released by the Fukushima Daiichi power plant after the March 11 disaster landed in the Pacific and made its way into other oceans around the world, scientists at the Meteorological Research Institute said.



Researchers said the radioactive materials, including caesium-137, an isotope with a half-life of more than 30 years, were widely dispersed when they entered the oceans and each particle would measure less than one micrometre – one seventh the size of a human red blood cell.



Using computer simulations, they calculated the material was first blown northeast over eastern Russia and Alaska, before falling into the Pacific and reaching the western coast of mainland US around March 17, Takahashi said.

The materials were believed to have completed their first around-the-globe trip by March 24, he said, adding that the results would be presented to an academic meeting in Nagoya, central Japan.

Fukushima disaster’s marine fallout

Nuclear contamination poses long-term threat to ocean ecosystem and to Japan’s fishing industry.

Steve Chao, Al Jazeera

30 Nov 2011 12:11

During the peak of Ukraine’s Chernobyl cataclysm of 1986, the Black Sea was registering 1,000 becquerels per cubic metre of water; this appears miniscule in comparison to nuclear levels at Fukushima’s peak recorded at 100,000 becquerels.

And it hasn’t stopped yet.

More Radioactive Water Leaks at Japanese Plant

By HIROKO TABUCHI and MARTIN FACKLER, The New York Times

Published: December 4, 201

(U)tility workers found that radioactive water was pooling in a catchment next to a purification device; the system was switched off, and the leak appeared to stop. But the company said it later discovered that leaked water was escaping, possibly through cracks in the catchment’s concrete wall, and was reaching an external gutter.

In all, as much as 220 tons of water may now have leaked from the facility, according to a report in the newspaper Asahi Shimbun that cited Tepco officials.

The company said that the water had about one million times as much radioactive strontium as the maximum safe level set by the government, but appeared to have already been cleaned of radioactive cesium before leaking out. Both elements are readily absorbed by living tissue and can greatly increase the risk of developing cancer.

Total Meltdown

All N-fuel may have fallen to outer vessel / TEPCO: Up to 68 tons likely melted in No. 1 reactor, eroding concrete of containment unit

The Yomiuri Shimbun

Dec. 2, 2011

In the No. 1 reactor, TEPCO believes, almost all of the about 68 tons of fuel melted. This has not only seriously damaged the bottom of the steel pressure vessel enough to create holes, but the fuel has also fallen to the concrete bottom of the containment vessel, eroding it by up to 65 centimeters.

Only 37 centimeters of concrete remains between the fuel and the vessel’s outermost steel wall in the most damaged area, TEPCO said.

That’s 25.6 and 14.6 inches for the metrically impaired.

Pepper Spray Saves Santa!

Crossposted from The Stars Hollow Gazette

Did Black Friday save the season? Beware the retail hype.

By Barry Ritholtz, The Washington Post

Saturday, December 3, 10:20 PM

We begin with a quick review of the retail sector in 2011: Sales improved versus 2010 by 3 to 4 percent. We use year-over-year comparisons because of the highly seasonal nature of retail sales. In 2010, sales were fairly soft, in part because much of the nation experienced severe weather. In the business, we call those “easy comps” – a low comparable data point that should be easy to beat.

Based on the first 10 months of the year, holiday shopping in 2011 should see similar improvements. Consistent with the year-over-year retail numbers, expect sales gains of 3 to 4 percent. Even so, these numbers come with caveats.

Prices in some products have risen – in some cases, substantially. The three most noteworthy are gasoline (up 15 percent), food (5 percent) and cotton (a whopping 230 percent).

The price pressures on these – all consumer staples – are reflected in the total retail sales data. When we look at total sales, we get a sense of how much the nation is spending – but, because of inflation, not how many goods people bought. Based on that data, we can conclude that a decent amount of the total dollar gains in retail sales are not improvements, but rather price inflation.



The reports released with Black Friday and the holiday weekend are from trade groups representing retailers. (They do not hide this.) Each year, they make wildly optimistic projections, which are repeated in the media like clockwork. By the time the actual data come in, the projections have been forgotten. By then, we learn that early reports were pure hokum, put out by trade groups to create a “positive shopping environment.”



“Traffic and spending were up both online and in stores, reaching historic highs. According to the survey, a record 226 million shoppers visited stores and Web sites over Black Friday weekend, up from 212 million last year. Digging deep into their holiday budgets, the average holiday shopper spent $398.62 this weekend, up from $365.34 last year. Total spending reached an estimated $52.4 billion.”

That would suggest that retail sales climbed 16 percent. They did not. Surveys where people forecast their future spending are pretty much worthless. They are far too unreliable to base sales forecasts upon.



How far off have these surveys been in the past? Enormously. In 2005, based on a survey on Black Friday and Saturday, the NRF forecast a 22 percent increase in holiday shopping gains for the Thanksgiving weekend. The results? Up just 1 percent.

The same foolishness resurfaced again in 2006, with an 18.9 percent sales increase forecast. Of course, the reality was nowhere near that, with sales gains below 5 percent. Incidentally, it is not just Shopmas: The back-to-school-season was another opportunity to repeat the error. And in 2007, just as the recession was getting underway, they forecast a 4 percent gain in sales. What happened? Sales at U.S. retailers “unexpectedly” dropped 0.4 percent in December 2007, the weakest holiday season since 2002. In 2008, given the broad scale of the economic collapse, what’s perhaps most surprising was the expectations for a 2.2 percent sales gain (sales fell 6 percent). In 2010, Black Friday weekend sales rise were estimated at 9.2 percent, and overall sales were forecast to rise in November and December 2010 by 11 percent. (They rose 5.5 percent.)



So when those breathless retail sales surveys were released (this year), we had no idea as to whether, and by exactly how much, sales might climb. The most that could be accurately said was that more people appeared to be in stores on Black Friday 2011 than in 2010. Indeed, that can be explained in part by the unseasonably warm weather around the country; as well as the extended store hours (including midnight Thanksgiving Day).

Partial Defaults…

and why they might be the best alternative.

Crossposted from The Stars Hollow Gazette

I found this a thought provoking piece.

David Apgar: Could Germany Be Right about the Euro?

Naked Capitalism

Sunday, December 4, 2011

What if there are good reasons for the preternatural calm of German Chancellor Merkel’s inner circle as the English-language media (based, after all, in the investor capitals of London and New York) light their collective hair on fire about the euro’s imminent immolation? Surprisingly, you can make a decent argument that the euro zone is at no risk of breakup – unless someone secretly switches its purpose from facilitating European trade to providing investors an implicit guarantee against losses.



Suppose, however, the feasibility of Mediterranean austerity – austerity at a scale big enough to impress the bond markets – is not what Merkel’s team is counting on. Suppose instead the Germans are really counting on the feasibility of a series of orderly partial defaults.



The big unasked question is not whether austerity might be tolerable but whether defaults would be as intolerable as the bond media insist. Here’s why Merkel’s team could have quietly concluded that the costs of a series of partial defaults are unavoidable even without any defaults, that some of those supposed costs may in fact be disguised benefits, and that the alternatives to selective debt relief are probably unsustainable.

As far as costs go, massive European bank restructuring comes to mind, especially following a cool €300 billion or so of losses on government bond holdings. It’s hard to say anything nice about bank restructuring, but at least we know how to do it. We know, for example, how to split good banks from bad banks. (Hint: rank balance sheet assets by quality and liabilities by seniority and draw a line across the balance sheet after the last asset of reasonably determinate value.) That’s handy when you need banks with systems in place ready to restart lending. And we know these transactions work when free from political interference as they were in Sweden in 1992. We also have institutions like the ECB ready to fix broken banks – unlike broken governments.

Less widely discussed, massive European bank restructuring may be unavoidable even if Europe somehow enlisted enough ECB printing presses, enough future earnings of all those carefree northern European taxpayers, and enough future benefits of all those docile southerners to plaster a smile on the face of every bond portfolio manager at BNP Paribas and Commerzbank. The scale of the bailout needed to avoid further investor losses as of today – much less tomorrow or next week – would entail cross-border consolidation or de facto nationalization of a significant portion of the euro banking sector.



The alternatives to partial defaults by countries that can’t afford to pay rising interest rates, furthermore, may be unsustainable. The most popular alternative has the ECB stepping in to buy bonds every time investors try to cut their exposure. At first blush, it looks clean – no forced austerity, no messy investor losses and bank restructurings, no burden on taxpayers in creditor countries like Germany. The only problem is that it would be inflationary.

And that inflation turns out to be quite a problem. With such ECB generosity on offer – and with euro zone inflation looming – why would any bond trader with a pulse stop after dumping her Greek, Portuguese, Irish, Italian, and Spanish exposure? Why not get rid of the French and German paper in the vaults, as well? Get rid of it all. Well, maybe not the Estonian bonds. But the ECB would be buried.



Ironically, the ECB purchaser-of-last-resort and eurobond alternatives probably would break up the euro zone. The inflationary strains of the former, and the accountability problems of the latter, would never survive the next referendum in a euro zone state. The purpose of the euro is to facilitate trade and commerce – not facilitate government borrowing.

This, then, is the impasse euro zone bond investors have reached. To avoid losses, they clamor for alternatives that could disrupt the currency itself – one of the few things that might actually make them worse off in real terms than they are right now.

Frankly there is no reason to believe that the Euro crisis is causing anything but kneejerk neoliberal responses from elites who are bound by faith alone to policies and doctrines that are factually proven failures.

Still, it does make you think.

And by “impeccable,” I mean completely peccable!

Crossposted from The Stars Hollow Gazette

The art of Griftopia

Felix Salmon, Reuters

Dec 2, 2011 11:43 EST

I’m in Miami right now, for the annual bacchanal of conspicuous consumption that is Art Basel Miami Beach. There are two equally important things going on here (and by “important” I mean “not important at all”) – a tiny group of people spending huge sums of money on art; and a small group of people in extremely expensive shoes gossiping about who’s buying what.

But the money sloshing around the art world is, ultimately, small potatoes. Any one artwork might sell for an astonishing amount of money… (b)ut compared with the sums of money in finance, the entire contemporary-art circus is basically a rounding error.



(A) work of art about the way in which the entire financial crisis is utterly incomprehensible to anybody who doesn’t study it day in and day out for months. Everybody wants easy answers or villains, but in fact everybody was to blame, and Powhida’s piece is a great way of showing how difficult it really is to understand this stuff. The CFTC, for instance, has a prominent part in the work, and goes unexplained: if you don’t know what it is – and 95% of the people looking at the work will have no idea what it is – then you’ll begin to get a good idea of just how beyond your grasp the financial crisis lies.

Here at Art Basel, everybody is in their comfort zone – the art world knows how to buy and sell and backstab and gossip, and it does it very well. And wading into the belly of the beast, Postmasters has brought Powhida’s works down to Miami, the natural home for high-impact pieces for people with short attention spans. I doubt they’ll do very well. But you never know: if people are still feeling the pain on the condo they bought at the top of the market because they thought it would be nice way to make a profit while having a pied-à-terre down here, Powhida might just pique their interest.

When art galleries ratify forgeries

Felix Salmon, Reuters

Dec 3, 2011 12:50 EST

Patricia Cohen has uncovered the art-world scandal of the year: it seems as though Knoedler, the 164-year-old Upper East Side institution, closed abruptly on Wednesday in large part to protect itself against a $17 million lawsuit from Pierre Lagrange. Lagrange spent that sum on a Pollock which he then discovered contained two paints which had not been manufactured until after Pollock died. And now it seems that Knoedler regularly sold AbEx paintings procured by Glafira Rosales with the vaguest of provenance.



The point here is that the art market, like the stock market, runs on a combination of trust and storytelling ability. The most expensive artists are nearly always those who can be credibly placed into central slot in the history of art; one of the main reasons that Abstract Expressionists in general are so expensive is because they have spent decades as the very heart of MoMA’s collection, which presented them as the pinnacle of 20th Century art, the artists standing on the shoulders of people like Picasso.

When gallerists sell paintings, they tell stories not only about the work, but also about the story behind the work, conjuring up romantic notions of dealings between Robert Motherwell and Mexican sugar magnates, brokered by “man named Alfonso Ossorio”. So long as the institution selling the work is trustworthy, potential buyers tend to take such stories at face value – and, of course, they have a vested financial interest in those stories being true, the minute they actually buy the piece.



Freedman would also have found it much harder to sell all those Motherwells if she hadn’t had the full institutional credibility of Knoedler behind her. That’s how galleries can be such lucrative businesses to be in: once you’re established, you can literally add hundreds of thousands or even millions of dollars to the value of a painting, just by hanging it on your wall. A fake Motherwell in a garage in Switzerland is worthless; in an Upper East Side gallery, it’s priceless.

Until the forgery is uncovered, of course.

A metaphor our times.

Big Brother is watching you.

Crossposted from The Stars Hollow Gazette

Franken Investigates Secret Surveillance Software Loaded onto Smart Phones

By: David Dayen, Firedog Lake

Friday December 2, 2011 10:55 am

Carrier IQ’s alibi is that their software merely oversees and corrects network glitches rather than saves every keystroke you make on your phone. Nobody really buys that. This software has shown up on over 140 million phones nationwide.

Google has disclaimed any association with Carrier IQ. The iPhone includes some iteration of Carrier IQ, and other wireless manufacturers have admitted that the software is on their phones, but claim that the carriers requested them.

If this all sounds creepy, well, you’re paying attention. It also appears to violate US law.

Not that I have any love left for Al after his sell out on Protect IP.

But wait- there’s more.

(h/t CTuttle)

‘Spy Files’ Published by WikiLeaks Detail Massive International Surveillance Industry

By: Kevin Gosztola, Firedog Lake

Thursday December 1, 2011 10:10 am

This collection of brochures, manuals, contracts, presentations and catalogs can be broken down into four categories, which the Bureau for Invesitgative Journalism (TBIJ) details.

  1. Location Tracking – Surveillance companies peddle an IMSI catcher, “a popular mobile phone tracking technology” that can intercept mobile phones. TBIJ explains the “highly portable devices” can be “as small as a fist” and are capable of masking as a cell phone tower and emitting a signal that “can dupe thousands of mobile phones in a targeted area.” Users of this device “can then intercept SMS messages, phone calls and phone data.” Ability in Israel, Rohde & Schwarz in Germany and Harris Corp in the US are all companies that market this device. The Federal Bureau of Investigation (FBI) also uses the device and says it can “without a court order.”
  2. Hacking – TBIJ finds many of the companies sell “Trojan” software and “phone malware that allows the user to take control of a target’s computer or phone.” Companies that offer technology that make this possible include the “Hacking Team of Italy, Vupen Security in France, Gamma Group in the UK and SS8 in the US each offer such products, which they variously claim can hack the Apple iPhone, BlackBerry, Skype and the Microsoft operating system.” Especially alarming, SS8 claims its “Intellego product allows security forces to ‘see what they see, in real time’ including a ‘target’s draft-only emails, attached files, pictures and videos.’ Elaman, according to TBIJ, “says governments can use its products to ‘identify an individual’s location, their associates and members of a group, such as political opponents’.”
  3. Massive Surveillance – US companies like Blue Coat Systems and Cisco Systems “offer corporate and government buyers technology to filter out certain websites.” They sell technology that can “monitor and censor an entire country’s data or telecommunications network.” TBIJ explains this captures “everyone’s activities” whether they are suspects or not. And, the information that is collected can be sifted through to see what is valuable.
  4. Data Analysis – Phone conversations, individuals’ locations and Internet traffic can all be captured with “sophisticated analysis tools” that intelligence agencies, the military and the police are using for criminal investigations and on the battlefield.

Highlighting the kind of electronic surveillance that goes on in countries like Syria, Appelbaum declares during the press conference, “There are people being murdered every day as a result of these surveillance devices.” He adds, “These are exactly the kinds of tools the Stasi wished to us” and strongly urges people to reject the idea of lawful interception. (Lawful interception is what these companies say they are doing to get away with selling spy technology.)



The Washington Post reports many of the companies that sell the technology are “global suppliers.” They target law enforcement agencies and other government buyers. Additionally, the news publication finds, “Of the 51 companies whose sales brochures and other materials were obtained and released by WikiLeaks, 17 have secured U.S. government contracts in the last five years for agencies such as the FBI, the State Department and the National Security Agency, according to a Washington Post analysis of federal procurement documents.

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