Dear readers, I really did go looking for material, but I didn’t find anything that got my juices going enough to be post-worthy. Apologies.
Fresh hope for world’s fisheries BBC
World’s first computer may be even older than thought Short Sharp Science
Barclays and the monoline minuet FT Alphaville (hat tip Richard S)
Compensation Committees To Be More Like Audit Committees: Okie-Dokie Francine McKenna
China’s corporate world ruled by princes Elite Chinese Politics and Political Economy (hat tip reader Paul S)
Marc Faber: China’s numbers are fake Ed Harrison
Wall Street Analysts Keep Telling Big Earnings Lie David Pauly Bloomberg
The (almost) dollar crisis of 2007 … Brad Setser
Letter to the Queen: Why No One Predicted the Crisis Thomas Palley
Fiscal Policy and Banking Sector Repair Synergies Menzie Chinn
After Rescue, New Weakness Seen at A.I.G. New York Times. The fact set in the article is uglier than the headline.
GSEs Unlikely to Repay U.S. in Full Wall Street Journal (hat tip reader DoctoRx) Quelle surprise!
Billions in Lehman Claims Could Bury an Elusive Insurer New York Times
Bank Bonus Tab: $33 Billion Wall Street Journal
Japan logs record deflation as demand slides Financial Times
Rudd’s essay is on the money Steve Keen (hat tip reader Don B). Today’s must read. On how much we need to delever, and how long it will probably take. The example is Australia, but the implications are pretty sobering for the US. The US private debt to GDP ratio is higher than the level shown for Oz. Makes this humble blogger look like a raging bull.
Antidote du jour (hat tip reader Matthew E):
A wildfire in Santa Barbara, California last month helped forge some unlikely bonds. Rescued from the Jesusita Fire, a 3-week old bobcat kitten and 3 day old fawn became fast friends. The animal rescue in California brought predator and prey together. But these babies simply took comfort in each other’s company, snuggling under a desk at a dispatch office for hours.
The bobcat and fawn would not normally be placed together, due to regulations, but the rescuers had no choice. They snagged the bobcat kitten first, finding it dehydrated and near death. Later, they brought in the fawn and discovered they didn’t have a crate large enough for it. No matter – the kitten ran right over to the fawn, and the two became fast friends.
The organizations that rescued these and other animals in the fire are struggling:
All of these Santa Barbara area animal rescue organizations have put out a national plea for donations because of the overwhelming need for animal food, medicines, and space to house displaced animals. ART currently leases a 1.5-acre plot of land that houses rescued animals in enclosures on the property, which require around-the-clock care, and the organization is desperate to purchase the land. The morning after Di Sieno – along with an insanely cute bobcat cub and fawn photo – appeared on the Ellen Degeneres show – the landowner decided he needed to sell it and she’s concerned for the future of the animals she and her fellow workers just rescued. The WCN also seeks funds for their Oiled and Injured Seabird Rehab Center, and receive no City, State or federal funding. One of their volunteers, Nancy Callahan, runs W.I.L.D.E. Services which focuses on raccoons and opossums, had her home and facility burnt to the ground and must start over from scratch. After rehabilitation, the groups reintroduce rescued animals to the wild.
If you’d like to assist to the tireless dedication of volunteer efforts of the Animal Rescue Team, and the Santa Barbara Wildlife Care Network, please click on the one of the links and make a donation. Every little bit helps.
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Oh great, now the whole of AIG looks like a Ponzi. Wonder how long they can keep that airborne. It will make a truly impressive crater when it finally hits.
When you see what sadly passes as economic commentary in MSM Australia (excluding the Fin Review), Steve Keen is refreshing and his take on Rudd is correct. Australia is sadly under served by an uncritical economic media.
AIG
Who can honestly say that they didn't see this one coming?
Their core competency was "regulatory arbitrage", they ran circles around the euro regulators…..
Euro banking regulators vs. state insurance boards?
Honestly not sure on that one….
bob
Steve Keen's essay is absoutely superb.
Neoliberalism serves the same purpose now that Christianity did in the Ancien Régime. Before the advent of the Enlightenment, it was the entrenched inherited privilege of the European royalty in collusion with the Church. Today it is the entrenched inherited privilege of a new royalty in collusion with the academy.
One has to admire the eloquence with which Carlos Fuentes expressed the phenomena:
Mexico and Latin America, orphans long bereft of reason and progress, have avidly sought theologies that would give us faith, if not reason, and security, if not progress. From Saint Thomas Aquinas to Karl Marx, via Rousseau, Comte, and Bergson and on to Keynes, Prebisch, Hayek, and Milton Friedman, we are forsaken communicants seeking a church. We swallow all Hosts, even if they be millstones. And if things go badly, we soon discover the devil who deceived us, preventing us from reaching the Promised Land of positivism, Marxism, developmentalism, or neoliberalism, as the case may be.
It is worth recalling that the prefix "neo" is particularly well suited to this doctrine, which already had its change in Latin America during the last century. Throughout the nineteenth century, Latin America followed the precepts of laissez-faire and the magic of the markets, and its nations implemented policies geared toward exporting raw materials while importing capital and manufactured goods. Powerful economic elites emerged from Mexico to Argentina. The hope was that the wealth accumulated at the top would sooner or later find its way down to the bottom. This did not happen. It has never happened. Instead, the wealth generated at the working base found its way up to the top and stayed there.
–Carlos Fuentes, A New Time for Mexico
It was Argentine president Nestor Kirchner, however, who proved most clairvoyant. Speaking in 2005 of the ravages the doctrine of neoliberalism had wrecked on Latin America, he stated that its policy prescriptions "result in a death trap." He then went on to predict that it is a "trap that first ensnares and affects the weak, but sooner or later, by one form or another, also arrives to the powerful."
http://www.summit-americas.org/Documents%20for%20Argentina%20Summit%202005/IV%20Summit/Discursos/Discurso%20del%20presidente%20de%20la%20República%20Argentina.pdf
I first came across AIG's internal reinsurance schemes 5 or 6 months ago and have tried to play up them and the companies regulatory relief swaps exposure. The reinsurance thing happened under Hank Greenberg. It was a con in which AIG avoided paying outside reinsurers (pumping up profits much like Cassano's later CDS sales). The idea in both cases was that AIG would never have to make good on any of this stuff. It was free money. There would never be a general downturn. Housing prices would always go up. There would always be premia coming in the door and there would never be a major disaster that would affect AIG's whole insurance book. What could go wrong?
The truth is that the whole top leadership of AIG from Greenberg's time to Liddy's should be in jail.
The Capco story (elusive insurer) is another example of a con, similar to those at AIG. Sell insurance on the premise that you will never have to pay any claims. More free money.
The Wall Street analysts story is important too because it shows that Wall Street is about conning investors, not serving their interests. Investors aren't clients or partners. They are pigeons to be plucked.