Greetings Naked Capitalists! I had the good fortune of receiving lots of Antidotes yesterday. So I wanted to thank you all for the e-mails. There was a lot to choose from, so some of you will see your handiwork over the coming days. Thanks again.
Ed
What Germany knows about debt (Here is Tyler Cowen updating the points he made yesterday at the NYTimes)
More Stimulus Despair (Here is Paul Krugman making counter arguments)
Is Galbraith Right that Deficits are Never a Problem? Mark Thoma (I don’t think Galbraith really said deficits are never a problem. But I would say they certainly are an ex-post accounting identity that quantify how real resources have been deployed. In an economic depression, deploying idle resources is the critical policy goal. In the post, James Galbraith writes: "I say that good policies cannot be based on bad forecasts, that we should solve the unemployment problem first." Jobs first!)
America’s sensible stance on recovery Larry Summers (This is clearly propaganda – and not very good propaganda IMO because it should be all about jobs. But, you should read it anyway. It is a counterpoint to the FT Op-Ed from the Austerians in Germany – who I have sided with given the European context.
Zero marginal product workers Tyler Cowen
Why the battle is joined over tightening Martin Wolf
The New Poor – Job Training Struggles to Keep Pace in an Economy in Flux NYTimes
Shared Write-ups on BP’s Macondo Deepwater Horizon Well Energy Training Resources (Jerry sent this to me as a highly recommended source of reliable information on the basics of geology and the mechanics of drilling and oil and gas exploration for those seeking more on the Deepwater Horizon disaster.)
Spain’s cajas face no stress test shocks: association | Reuters (The European stress tests will be the same mock exercise in confidence building that the American ones were. Clearly no one is going to fail if the Cajas are going to pass the ‘stress’ tests. But to be credible there must be relative winners and losers. If asset prices underpinning bank balance sheets do not fall, the stress tests can buy time, if those prices fall, you have a problem. The same is true in the US, by the way.)
L’ex-otage Ingrid Betancourt refuse une offre d’indemnisation de la France Le Point
Sea Level Rise Swamps Islands Scientific American Podcast
Econbrowser: Fighting deflation James Hamilton
Day 1: America’s prison for terrorists often held the wrong men McClatchy
Google to Discontinue Nexus One Read Write Web (I own one of these. It got wet yesterday and stopped working. So I put it in a bowl of rice overnight as recommended on sites like Lifehacker – and presto this morning it is as good as new)
BlackBerry maker angry at Apple claims over signal reception The Guardian
The Pundit Delusion Paul Krugman (I forgot to mention that this is an “I told you so” which I agree with because I said the same thing at the time. So there you go.)
The Roots Of White Anxiety Ross Douthat
Bundesbank Says Deficit Countries Are Source of Danger for Monetary Union Bloomberg (This is nonsense, of course. Read Spain is the perfect example of a country that never should have joined the euro zone. Tell me how the Spanish could have lessened their current account deficit when interest rates were held low for slow-growth Germany?)
La morosidad de los créditos alcanza la cota más alta desde 1995 ABC
Engineers detect seepage near BP oil well Financial Post
India: hot economy brings private equity to the boil Beyond Brics
Hungary Resists New Budget Cuts Despite Pressure NYTimes
Watching a gene at work Scientific American (Hat tip Diane B)
Android Poised For Dominance In China, With Global Implications Tech Crunch
Roger Lowenstein – Paralyzed by Debt NYTimes
John Paulson’s reversal of fortune CNN Money
Antidote du Jour: Mice Love Scents Too! (Thanks Barbara).
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@America’s sensible stance on recovery –Larry Summers
Why do we listen to this guy? Why is he published in the Financial Times? Why is he still employed? Unfortunately, we know the answer to those questions. He and his cronies will stay with their fingers on the pulse –in one power position or another one way or another –– until we refuse.
Bloomberg reported the Harvard endowment’s investments have become so toxic that even Summers won’t explain what happened during his watch.
and who gives them their reputations? “In the Summers years, from 2001 to 2006, nothing was on auto-pilot. He [Larry Summers] was the unquestioned commander, a dominating personality with the talent to move a balkanized institution like Harvard, but also a man unafflicted, former colleagues say, with self-doubt in matters of finance.
Certainly, when it came to handling Harvard’s cash account, the former US Treasury secretary had no doubts. Widely considered one of the most brilliant economists of his generation, … ”
‘Harvard’s billions here
Obama administration economic guru Larry Summers may end up being best remembered for having destroyed almost single-handedly the Harvard University endowment fund as a result of misguided instructions he gave the fund’s management during his tenure as Harvard University president from 2002 to 2006.
Summers, currently director of the White House National Economic Council, called for an aggressive investment strategy in which Harvard’ endowment fund engaged in risky strategies, including derivative strategies that have burdened the nation’ largest university endowment with billions of dollars in toxic assets.
As a result, the Harvard endowment, which peaked at $36.9 billion in June 2008, has since lost some 30 percent of its value, dropping to $26 billion, according to Bloomberg News.
In October 2009, Harvard University paid $497.6 million to investment banks to get out from $1.1 billion in interest rate swaps that were intended to hedge variable-rate debt for capital projects, Bloomberg reported.
In what amounted to Harvard’s biggest endowment loss in 40 years, the university also agreed to pay $425 million over the next 30 to 40 years to offset an additional $764 million in credit-swap deals gone bad.
Citing failed interest rate swaps that forced Harvard to pay banks $1 billion just to terminate the junk contracts, Bloomberg reported the Harvard endowment’s investments have become so toxic that even Summers won’t explain what happened during his watch.
The Boston Globe squarely put the blame on Summers’ doorstep, noting he came into office with a bold vision to expand the size of its science facilities by more than a third.
Average yearly expenditures for facilities jumped from under $150 million in 1995-2000 at Harvard, to $495 million from 2001-2005, to $644 million in 2009.
“Summers told the faculty not to think small,” the Globe wrote. “Its ambitions were limited only by its imagination, he said. “Harvard could always come up with more money from its ‘deeply loyal fans.'”
Unfortunately, deeply loyal fans and alumni with deep pockets were not enough to bail the university out from Sumner’s ill advised investment advice.
Bloomberg reported that cash-strapped Harvard recently asked Massachusetts for fast-track approval to borrow $2.5 billion.
The damage done to Harvard is not limited to plans to expand the science facility into blue-collar Allston. Now, the university is faced with slashing faculty and staff.
Last year, more than 1,600 of Harvard’s staff were offered early retirement, and more than 500 accepted.
“Loyal alumni have contributed generously to staunch the bleeding,” the Globe wrote, “but huge deficits remain in spite of all the reductions. Harvard will be a smaller place when the dust settles, with less educational and scholarly reach. It will employ fewer people and will contribute less to local and national prosperity.”‘
ha ha ha ha. OK I’m cynic and a drunk and a humanist. or at least 1 of those 3. Sometimes a drunk, and every once and a while a cynic, but always a humanist, even when I want to be a hard ass. I just can’t.
Except. When I read about guys like Larry Summers and places like Harvard. Then my ass gets really hard.
It seems like they deserve each other and that their mutual shrinkage is salutary for the universe. And that the best thing for the US of A would be for Harvard to contract into a little dot and disappear — given its track record for almost everything. And for Larry Summers to quit his job and go home, wherever that is, and shut up.
LOL.
Leanne, you look mahvelous . , , thanks for your righteous rage.
I can’t wait not to vote for these corporate assholes next November. But looking at it all from the standpoint of theoretical-anthropological-theological-noological-eschatological-politcal economy Not sure how we can rid ourselves of this plague, it could be an existential test that only God understands. God and all the butterflies Ha ha ha.
Heck-of-a-job Summers, “a man unafflicted…with self-doubt”
The guy could have been W’s advisor. It really is nothing but a confidence game at this stage of imperial pre-liquidation.
You have to wonder what it takes to get these frat bastards fired … or at least not hired, for God’s sake. Is there anyone close to power that sill stand up and declare this guy is naked and repulsive?
I was just hearing mournful violins and weeping guitars over antoher link: “John Paulson’s reversal of fortune”. What a tragedy: bilk a few billions, lose a few billions.
re: sea level rise
Perhaps this has something to do with how an island was formed to begin with, and what it’s local geological conditions are in the midst of climate change and other effects (erosion, volcanic activity, plate tectonics, etc)
Shape-shifting islands defy sea-level rise http://www.newscientist.com/article/mg20627633.700-shapeshifting-islands-defy-sealevel-rise.html
AGAINST all the odds, a number of shape-shifting islands in the middle of the Pacific Ocean are standing up to the effects of climate change. For years, people have warned that the smallest nations on the planet – island states that barely rise out of the ocean – face being wiped off the map by rising sea levels. Now the first analysis of the data broadly suggests the opposite: most have remained stable over the last 60 years, while some have even grown.
The New York Times has an article about how almost all the rich in Pakistan don’t pay any income taxes:
http://www.nytimes.com/2010/07/19/world/asia/19taxes.html?ref=world
Strangely, this has not made Pakistan the economic envy of the world.
The antidote is excellent. However I wish the picture size would be bigger. Yves would easily post pictures double that size.
Ross Douthat’s column is interesting. I was surprised by the aggressiveness of readers’ comments. Effete urban liberals that probably constitutes the majority of NYT’s readership have been trashing the poor Douthat. They argue that if rednecks aren’t admitted in ivy leagues it’s because they prefer to stay at home and study creationism in bible universities. Unfortunately for those readers Douthat’s conclusions come from an academic book-length study. I won’t bother reading the book but I’m sure the authors are capable statisticians who have corrected for the fact that white christian right wing students are less likely to apply, if that’s indeed the case.
The Antidote is much bigger but Yves blogging platform shrank it and didn’t link to the bigger picture. I will fix that if I can figure it out.
It’s fixed now. Thanks.
Unfortunately, intellectualism doesn’t necessarily reflect intelligence (or more importantly “smartness”). Liberal (leftist, socialist, progressive, whatever) intellectuals are as close-minded as their Conservative (rightists, fascists, whatever) adversaries. Both live off their righteousness.
I’m sick of reading about PhD, Nobel-Prize winning, and authoritative economists too. If the last two years have proven anything it’s that economist are full of bullshit and their “profession” is nothing but opinions. It’s getting disgusting. People should be ashamed to admit they are “economists” by now. I have nothing against studying financial history, but please let’s stop claiming financial history is anything BUT history with lots of numbers.
Yes, but how are you any better? Die please.
The problem with the “book-length study” referred to in Douthat’s article (a.k.a. the former’s graduate student coauthor’s PhD thesis) is that it is a small, anecdotal work that may very well not be indicative of the larger picture.
http://press.princeton.edu/titles/9072.html
9000 students studied from the early 1980s-late 1990s at 8 institutions may very not be representative of the entire US. The data were taken from three time points: 1983, 1993 and 1997. 2 institutions were dropped from the analysis for some unknown reason. The remaining 8 instituions’ worth of data are claimed to be representative because there are no statistically ‘meaningful’ (note the non-use of the word ‘significant’) differences in a small set of broad metrics between those 8 institutions and the top 50 from the US News & World Report annual ranking from a single year (2004), which was not a year from which data were sampled. (That info was taken from the .pdf file of Chapter 1 available online.) There is no indication that any part of this book was published as a peer-reviewed article. PhD theses are not typically peer-reviewed in the same manner as journal publications, if at all.
Morever, Douthat’s title is more than a bit misleading. How could any serious commentator entitle an article “The Roots of White Anxiety” and not mention the ongoing loss of jobs suitable for maintaining a middle class existence for those “working-class whites” featured in his column?
http://www.npr.org/templates/story/story.php?storyId=128600385&ft=1&f=1006
Dr. JOHN STEIN (Deputy Science Director, Food Inspection Program, NOAA): And if you think about your ability to detect something in your refrigerator, it has an off odor, you can detect it at very, very low levels.
LOHR: State employees and professors, 56 of them who live along the Gulf Coast, have been called into sniffing duty. The FDA and NOAA conduct training for these people who are the first line of defense.
RETARDS!!!!!! Maybe the sniffers should be sniffing around for bullshit science and non-regulation!
The New Poor – Job Training Struggles to Keep Pace in an Economy in Flux NYTimes
http://www.nytimes.com/2010/07/19/business/19training.html?ref=business
There are a lot of really interesting comments attached to the above article (251 at this count). I often find the comments better than articles in many stories….
Regarding fixing a Nexus One, does it matter if you soak it in a bowl of sushi rice rather than, say, fried rice?
So Gulf seafood is safe, but should we eat it?
http://trueslant.com/jeffmcmahon/2010/07/19/should-we-eat-gulf-seafood/
The possible effects of the spill on Gulf seafood are of at least some concern to 89 percent of respondents, and 50 percent said they are “extremely concerned.” When asked how the oil spill will affect their consumption of seafood, 54 percent report some impact, with 44 percent of that group saying they will only eat seafood that they know does not come from the Gulf of Mexico, and another 31 percent saying they will eat less seafood regardless of where it comes from… including oil tankers..
Also: Valdez spill’s effects on fish raise concerns
Pacific herring vanished after disaster, and Gulf fishermen fear it will happen here
http://www.chron.com/disp/story.mpl/business/7113052.html
More than two decades after the Exxon Valdez fouled the Prince William Sound, scientists still don’t understand what devastated the herring population, which used to be harvested each year by the tens of thousands of tons, but has not recovered and may never return.
==> Every year as seasons open, large shrimping boats move from state to state in federal waters and stay out for weeks, freezing their catch and returning to a home port to sell. But that requires fuel, food, ice and crew costs that quickly add up, said longtime Louisiana shrimper Kimberly Chauvin.
“People just don’t have that kind of money right now,” said Chauvin, whose three boats were among the first hired to help BP with the oil spill cleanup.
But, she conceded, anything might be possible if the water closure that began May 2 drags on.
“People in dire situations will do what they need to do to go shrimping,” Chauvin said.
Texas fishermen are nervous about the uncertainties caused by the spill but plan to stick it out.
zero marginal product workers?
how about negative marginal product workers . . . the FIRE executives who imploded the economy and somehow still have their jobs, their bonuses and their hedged investment portfolios and their political appointments.
but somehow they are productive.
and some dude or dudette with a high school GED or less — due in part to fate and family and Acts of the Lord — somehow they are “zero” marginal product workers because the economy can crank just a little more of the shit out of its asshole without them?
This is analysis?
This is thinking?
This is something that an intelligent person believes?
It’s going to be a long century, if I extrapolate . . . LOL Maybe we’re all just going backwards through time and we don’t know it. Soon they’ll be burning witches again, and then sacrificing spotless virgins and then crucifying people.
I don’t know. I guess being a GED in the USA is already a form of crucifixion. You don’t need the nails when you have the Power Elite and Efficient Market Ideology to hold your arms and legs to the beams.
RE: Larry Summers, Harvard elitists, propaganda that insults the intelliigence of even the dumbest unemployed folks out there.
I’m pretty sure we’re at, and will remain at, Euro level unemployment for the foresseable future. Stimulus in some form is a given. The structural form it follows for the next few years isn’t going to be settled rationally during the current crunch period (next 18 mos or so).
The debates among the MMTers, Austerians and deficit hawks will be interminable, and I think need to be put off till tomorrow. The tragedy is the people most affected can’t follow along anyway, nor can they trust the debaters.
Today, I’d call Summers’ bluff that tax cuts are stimulative. Simply, and immediately, declare a FICA holiday till a longer term stimulus program is debated and implemented. Try a hefty tax cut for the not rich, see how stimulative that really is, engage the hoi polloi in the solution, then see what happens.
If anyone seriously wants to engage ordinary folks in the policy debate (which I doubt, but hope for anyway)I can’t think of a more effective way than giving the people who actually live on their paychecks a stake in this game.
Who knows, they might even vote for the Democrats who implement it come November, and toss those self hating teabaggers into the dustbin.
The debates among the MMTers, Austerians and deficit hawks will be interminable, and I think need to be put off till tomorrow. The tragedy is the people most affected can’t follow along anyway, nor can they trust the debaters.
You’re actually repeating a Summers talking point when you say that.
See here
http://www.ritholtz.com/blog/2010/07/martin-wolf-on-the-austerity-debate/
for Summers on the “unhelpful dialectic” of debating whether jobs or deficits are more important. Of course by that Summers means that anyone who cares about jobs should STFU. (He’s also channeling Obama’s rhetoric about “tired debates” and “false debates” and his general hatred of democracy.)
The MMTers, who you join Summers in attacking, have if nothing else consistently called for a real jobs program. (At least the ones who aren’t too cowardly to make policy prescriptions. Like as if we have time to screw around.)
look again –that mouse is getting high.
Ed,
For antidotes: since an animal needs to be present to qualify, I can’t resist proposing this (from Jesse) for consideration.
http://2.bp.blogspot.com/_H2DePAZe2gA/TER_1jnFFVI/AAAAAAAAN0Q/2aQevfr-ur0/s1600/themaestro.jpg
I don’t know how much license you have to bend the rules, but this is too good to pass up.
Enjoy
That’s great! Social Security deficit hypocrisy -clear and witty.
Huh, not surewhat you’re saying? please larify/
RE: “The Roots of White Anxiety”
This article is mistitled, the title is obviously aimed at grabbing attention of the right and left…but then proceeds to discuss admissions policies at various educational institutions.
In addition, the article purports to discern admissions policies and conclude that ‘red state americans of the middle class’ are discriminated against if they use certain extra carricular activities such as ROTC, Future Farmers of America, etc, on their admissions forms.
The single most important reason that these students are not admitted is not even discussed…The families of the ROTC/FFA etc are the least likely to leave an endowment to the institution that they are applying to. Does anyone believe that university administrations are not influenced by the likelyhood of an endowment from an applicatant or the applicant’s family? Does anyone believe that statistics on endowments have not been compiled and utilized by university administrations?
Universities have X number of openings for students. They must make education avalilable for some ‘unerprivilaged’ students because of state and federal mandates. They must make room for students of alumni that have/are giving money to the university or have left an endowment to the university. The number of alumni contiue to grow…so, there will more crowding out of those ROTC/FFA students.
As usual, if you follow the money trail you will find that many research projects findings are flawed, because the researchers did not follow the money trail for they had a conclusion in mind, and therefore a bias, prior to beginning their ‘research’.
A miniscule amount of critical thinking will blow these sorts of ‘studies’ out of the water. I wonder how much grant money was provided for this nonsense?