Growing stocks of unsold cars around the world Guardian (hat tip reader doc holiday).
Government Regulators Aided IndyMac Cover-Up, Maybe Others ABC (hat tip reader CrocodileChuck)
Investors turn their backs on mega-funds Financial Times. Couldn’t happen to a nicer bunch.
Aggregate Supply-Driven Deflation and Its Implications for Macroeconomic Stability David Beckworth. Argues that deflation caused by increases in aggregate supply produce benign deflation and works through the implications.
Cost of Borrowing Zooms Up for Corporations New York Times
The ‘Preliminary Views on Financial Statement Presentation”: Seven Years of Deliberation for This? The Accounting Onion (hat tip Independent Accountant)
The Terminator Slashes Money to the Poor EMSNews. Includes historical comparisons.
Investor puts pressure on HSBC to let US sub-prime unit go bankrupt Times Online, The idea is to stiff unsecured Household bondholders. I suspect we are going to see a lot more of this sort of thing at least under consideration.
‘What if’ becomes the default question Wolfgang Munchau, Financial Times. Why a eurozone sovereign default is probably not the end of the euro.
How the Ensure that an Aggregator (or Bad) Bank Isn’t Another Taxpayer-Financed Boondoggle for the Banks That Got Us Into This Mess Robert Reich. He advocates penance and hair shirts.
Why Nationalization is the Best Alternative Felix Salmon
Antidote du jour:
19 comments
Comments are closed.
If they are filling up car racing circuits now, maybe it is getting a bit critical. Old cold war airfields have been repositories for unsold cars for over a decade now – try sticking “Upper Heyford” into Google Maps and looking at the satpic for an snapshot of unsold Land Rovers from some indeterminate time back. About a decade ago I had to land there (on the taxiway because the runway was full of cars). It was a stunning sight, all guarded by one slightly harassed looking bloke.
Chipping Warden is another one I expect.
Quick look at Chipping Warden in Google Earth and yep, truck loads of parked vehicles.
re the munchau article – one unique aspect of the european union is that european law supercedes national law of the member states (this principle is take much more seriously than e.g. the usa takes international laws like the geneva conventions, as it underpins the entire european edifice). the implication is that it is possible in theory to institute sovereign bankruptcy proceedings under european law.
my recommendation would be to have a manageable portion of each sovereign’s debt (say 60% of gdp per the maastricht criteria) granted an explicit joint and several guarantee from the other eurozone members. the residual portion would then be left as standalone and fully subordinated. so e.g. if italy went bust with 120% debt to gdp, half of every italian debt would be explicitly guaranteed by the eurozone, however italy could only draw on that guarantee once it had reduced payments on the other half to zero (and could only resume payments on the other half once it repaid the guarantors).
doing this would create a strong long-term market incentive for sovereigns to bring their debtloads down to a sensible level. it would also clarify the extent of inter-governmental guarantees in the eurozone, which is currently murky and untested, and therefore something that could create a lot of volatile “price discovery” in a sovereign crisis. and it would also create the scope for turning the joint-and-several portion of eurozone sovereign debt into a proper treasuries market to rival us treasuries.
just a thought..
re the munchau article – one unique aspect of the european union is that european law supercedes national law of the member states (this principle is take much more seriously than e.g. the usa takes international laws like the geneva conventions, as it underpins the entire european edifice). the implication is that it is possible in theory to institute sovereign bankruptcy proceedings under european law.
my recommendation would be to have a manageable portion of each sovereign’s debt (say 60% of gdp per the maastricht criteria) granted an explicit joint and several guarantee from the other eurozone members. the residual portion would then be left as standalone and fully subordinated. so e.g. if italy went bust with 120% debt to gdp, half of every italian debt would be explicitly guaranteed by the eurozone, however italy could only draw on that guarantee once it had reduced payments on the other half to zero (and could only resume payments on the other half once it repaid the guarantors).
doing this would create a strong long-term market incentive for sovereigns to bring their debtloads down to a sensible level. it would also clarify the extent of inter-governmental guarantees in the eurozone, which is currently murky and untested, and therefore something that could create a lot of volatile “price discovery” in a sovereign crisis. and it would also create the scope for turning the joint-and-several portion of eurozone sovereign debt into a proper treasuries market to rival us treasuries.
just a thought..
Like you I am frustrated over how certain gov’t actions, such as the rescues of Citi and BofA, have incurred very large obligations on the part of the US taxpayer without any kind of public debate or legislative oversight. I have one more example:
The new extension by the FDIC of loans made to financial institutions must be collateralized. Now how is the worth of the collateral determined? What prevents a bank from pooling impaired assetstogether and using it as collateral at face value with the agreement of the FDIC? Another backdoor subsidy by Sheila Bair?
“Investor puts pressure on HSBC to let US sub-prime unit go bankrupt”
In the above story, stockholders SCREW bondholders. This is where we are now:
WHO IS TO BE TOSSED OUT OF THE LIFEBOAT?
Only so much Government Grease to go round, so even some of the Rich and Influential will be taking hits.
Those left standing will be the ones who had the most Influence, Connection and Mojo. Actual worthiness, ability or merit will have absolutely nothing to do with who feeds the circling sharks. The kind of businesses which do survive will have little to do with economic worth or need.
Best not to be on Flight Air America at all, take one of those taxpayer funded Corporate Jets. All other Flights are for the birds and suckers.
i notice there has been a sharp selloff in the pound AND long dated gilts today, following the uk govt’s announcement of its new lending insurance plan.
this is NOT a good development, as it suggests that pound weakness is now linked to questions of government solvency. the previous few months’ slide in the pound was associated with rate cuts and recession expectations, but not sovereign risk as gilts had actually been rallying until the entire curve was inside 3%. not any more..
sorry, meant inside 4%..
The caption for the photograph of the car track says “thousands” … yet, based on a rough count, it appears the upper bound is about one thousand.
Several of the images of excess cars I had seen before. But this story is new to me.
3000 cars left, keys in the ignition, at the Dubai Airport.
South Asians returning home, leaving their debits behind.
http://www.daijiworld.com/news/news_disp.asp?n_id=55704&n_tit=Indians+Flee+Dubai+as+Dreams+Crash++-+Fall+out+of++Economic+Crisis
Argues that deflation caused by increases in aggregate supply produce benign deflation and works through the implications.
Should not be a controversial conclusion, given that this is exactly what happened for almost the entire nineteenth century.
Those left standing will be the ones who had the most Influence, Connection and Mojo. Actual worthiness, ability or merit will have absolutely nothing to do with who feeds the circling sharks.
Wow, almost sounds like the kind of thing someone like, you know, Ayn Rand, warned about. “Aristocracy of Pull” anyone?
When it comes to getting stiffed, the first in line for the privilege are the parties LEAST capable of litigating.
Hence, social programs and plain-vanilla retail investors are most likely to get the shaft.
Regarding the “Terminator” story, I’m a Californian wondering what the end game is with the budget deadlock. Yes, California is carrying an unworkable debt load. But the game on right now is the California Congress won’t even pass a budget to begin to authorize any kind of spending in 2009.
I’m too much of a Rube to understand why not even having a budget that spends any money at all is the most desirable outcome. Your ideas are welcome.
Re: Budget constraint issues.
No new students at UW in Seattle this spring
http://seattletimes.nwsource.com/html/education/2008639544_uwfreeze17m.html
This seems to me like a pretty big deal. But maybe it is just because I live on the wrong coast.
Here are some samples of the latest posting from the EMS News Blog, the one that Yves linked to for their post titled “The Terminator Slashes Money to the Poor”:
Quotes(by the author of the Blog Yves linked to):
“The most evil thing about Zionism is the high intelligence, the ‘cultural achievements’ aspect of these neo-nazis.”
“Boasting about how culturally superior they are to the ‘animals in the ghetto’, they [The Jews] pride themselves on being the beacon of humanity, not being the worst monsters on earth.”
“The New York Times is a Jewish newspaper and its coverage of the Jewish massacre of the ghetto Palestinians reflects not only the Jewishness of the NYT, their coverage being extremely one-sided, but also shows how the Jewish community is growing to be very much like the cultivated, rich, well-schooled German Nazi population.”
“Sieg Heil, Israel!”
“Despite international outcry about the Nazi smashing of UN facilities, schools, etc, the Jews are clinging to their story that ‘fighters’ attacked their rampaging army, using these buildings as cover. The Jews should be thoroughly ashamed of themselves. They kept out reporters. They want us to take them for their word. And they [The Jews] have a long, long history of lying.”
“Israel is not becoming more and more liberal. As they openly pursue obvious Nazi policies, they are becoming more and more fascist. The massacre was VERY popular with these [again, the Jews] increasingly cruel and vicious people.”
Draw conclusions for yourself. If you ran a blog, would you post links from a blogger who openly espoused such bigoted assumptions about an entire group of people? Would you, as a blogger, link to the David Duke website or to La Raza?
Yves, you need to account for yourself and stop posting links to hate sites. The quotes above refer only to one article on this blog. Many others are extremely racist as well.
Is this a case of birds of a feather flocking together?
Russ you are right – there is some very toxic stuff there. I think the latest wildly antisemitic post was made today so Yves wouldn’t have seen it when making her link. I certainly didn’t spot it when I looked at the links this morning and I would have said something myself if I had seen anything untoward. I am on UK time and Yves is a night owl so I often see the links pretty much straight after they were posted.
I very much doubt if the suspicion you express in the last sentence of your comment is justified and I expect Yves will pull the link when she sees the background.
Senate.gov – The Geithner File (PDF)
Richard, perhaps I overstepped in my suspicion. If so, I apologize for the insinuation. However, this article is not an isolated incident on the emsnews blog from which the “Terminator” story was linked.
Some other examples:
http://emsnews.wordpress.com/2009/01/13/bush-stoops-for-olmert-who-pisses-on-him/
“Since the Jews who live in America support Israel over America, this means, they will be tempted to commit treason. Namely, screw America so Israel can flourish.”
“Obama better slap down these guys, and do it fast and do it hard. If he doesn’t, he will be on his knees while some arrogant Jewish leader pisses on him, too.”
Here is another post from that blogger entitled “Clusterf#@k US-Zionist Policies aren’t working.” Where our author breathlessly informs that the reason American coverage is allegedly biased in favor of Israel is due one reason:
She states: ” This is because Zionist Jews own most of our media.”
More, from the same article:
“Either the Jews must let loose their death grip on the US government or, when this government fails due to corruption, treason and bankruptcy, the next ruling party will not be kind to Jews.”
http://emsnews.wordpress.com/2009/01/12/clusterfuck-uszionist-policies-arent-working/
It is horrible stuff – you are right, definitely a hate site. That Gaza story has a particular slant too.
Just shows how far you have to dig into the sites around links.
Linking to a particular post does not imply that I agree with or find noteworthy anything beyond that particular post. It most certainly does not imply that I endorse the world view of the sponsor/writer. As you will see, in this Links I featured a paper from the Cato Institute. My views are most decidedly not aligned with Cato. I have also linked to or commented on articles from Murdoch outlets, videos from Fox News, articles by quite a few conservative economists where I find there latest work of interest but do not agree with most of what they write (Greg Mankiw would fall into this camp, where I applaud his support for Pogovian taxes on carbon but disagree with most of his other views).
I have over 400 blogs in my RSS reader. I am not able to keep up with the headlines, truth be told, and read only a few, such as Econbrowser, regularly. The blog in question has had very good coverage on China in the past which is why it is in my RSS reader (the writer hosted the top leaders of the Communist party in her home for months in the late 1960s and she surveys the Chinese news intently). I may have linked to it once or twice on China more than nine months ago.
Having now had a look, I agree she has gone off the deep end in her recent posts on Israel. This is a turn and not in keeping with what I read when I first came upon that blog. While I do think the war in Gaza will prove to have been a huge mistake (as in it may have been a tactical victory but at huge strategic cost), this way of expressing opposition is counterproductive, and I most certainly do NOT endorse the sort of bigoted ranting you pointed to, and in addition, the way she conflates Israeli neocons with Judiiasm generally. There are Jews in Israel who are not happy about what happened in Gaza (read the liberal papers like Ha’aretz) and some here are also quietly distressed.