We are hosting the Book Salon for Gretchen Morgenson’s and Josh Rosner’s Reckless Endangerment today at FireDogLake from 5-7 PM EDT. Be there or be square!
How the kangaroo got its bounce BBC
Study shows dogs can sniff out lung cancer Giznag
Watergate’s ‘Deep Throat’ garage gets historical marker USA Today
Strauss-Kahn accuser might drop case for cash payment Raw Story
Trouble in Paradise Wall Street Journal. These deals are Europe’s analogues to the Jefferson County sewer financing. Why do municipalities allow themselves to be talked into complicated deals with hidden risks to save (probably) 50 basis points?
Tabloid’s Pursuit of Missing Girl Led to Its Own Demise Wall Street Journal. This is what you get when the Journal has to report on its parent. The story isn’t terrible as far as it goes, but it is framed incredibly narrowly and (amusingly) underplays the public’s reaction to the Miller Dowler story and the other legs of the scandal.
Glenn Mulcaire ordered to reveal who told him to hack phones Guardian
Hershey walkout: Foreign students nix firms’ offer Christian Science Monitor
President Fuck You: Raising Medicare eligibility to 67 is a “modest reduction” Lambert Strether
Who said this: Obama or Hoover? Ed Harrison
Whatever Rick Perry’s Record Is, It’s Not Conservative The New Republic (hat tip reader furzy mouse)
How Does Bank Of America Plan To ‘Help Out’ Rick Perry? Dealbreaker
US debate intensifies over taxes on the rich Financial Times. This is a little misleading. It’s a debate only among the rich themselves (well, and their operatives).
Tax the super-rich or riots will rage in 2012 MarketWatch (hat tip reader May S)
Moody’s lowers rating on Lender Processing Associated Press
Treasury Rally Pushes Yields to Record Lows Bloomberg
Bond markets signal ‘Japanese’ slump for US and Europe Ambrose Evans-Pritchard, Telegraph. Ahem, yours truly made the deflation call as soon as it was clear the US would be cutting the Federal deficit. Deflationary policies were already in place in the Eurozone, they are also operative at the state level and will now be compounded by Federal policy. But this article has more grim tales re Eurobank liquidity. The dollar funding gap is back to $1 trillion, which if I recall correctly is about where it was on the eve of the crisis (I though I had read reassurances that things were safer now because the dollar funding gap was down to $500 billion. So much for that sighting).
Global Bank Capital Regime at Risk as Regulators Spar Over Rules Bloomberg
Antidote du jour:
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i can’t tell from the story whether the dogs are simply sniffing out carcinogens in people’s breath or sniffing out the actual disease. can anyone clarify?
A story I’ve seen on this is that tumors exude aromatic hydrocarbons, eg benzene, as a result of their altered metabolism. This is what the dogs sense, and register as ‘abnormal’.
“Why do municipalities allow themselves to be talked into complicated deals with hidden risks to save (probably) 50 basis points?” Because every penny saved on loan interest is a penny available for buying votes.
Oh, please. They’re not after votes. Votes are a means to an end. It’s money they’re after. Well, money is a means to an end. It’s power, or the illusion of control over their lives, that they’re after. That illusion is so highly prized. The illusion that we can control our surroundings. The illusion that we can control the consequences of our actions. The illusion that our control can extend past our death, past our mortality.
They do these deals for kickbacks more than for votes, and if the money is better in the private sector than the kickbacks the public sector can gin up, then they’ll junk their governorship or their congressional seat to sit on a news show, or become a lobbyist or whatever else the market is paying top dollar for.
These people are agents, and it is the rare agent that is actually looking out for the principal. That’s why the principal has to stay vigilant about the agent.
You think we can do without agents? You are delusional. That’s not reality. There will always be agents. Collective action is inevitable; you will be destroyed by it if you don’t join one side or the other. Sorry, standing in front of a tank is suicide, heroic illusions aside.
The only thing we can do is be vigilant and try our best to ensure that the agents are doing what they are hired to do. This isn’t rocket science.
“Why do municipalities allow themselves to be talked into complicated deals with hidden risks to save (probably) 50 basis points?” Because every penny saved on loan interest is a penny available for buying votes.
No, absolutely incorrect. It is because they’re bribed.
Re: “Trouble in Paradise Wall Street Journal. These deals are Europe’s analogues to the Jefferson County sewer financing. Why do municipalities allow themselves to be talked into complicated deals with hidden risks to save (probably) 50 basis points?”
There was a decent documentary on dutch TV about Italian munis (including the city of Milan) doing similar things (I think they were taking on CDS risk or something; it was broadcast more than a year ago, but it had interviews with Reggie Middleton (Boombustblog) and Matt Taibbi for some general background; I suspect parts can be found on youtube). The people doing it were in over their heads, anyway — fooled by the sales pitches the banks had made.
(As well as these variable interest rate deals.)
Anyway, it is a great example of how everything is connected, and how a flight to “quality” can easily worsen an existing crisis in a huge way.
“Why do municipalities allow themselves to be talked into complicated deals with hidden risks to save (probably) 50 basis points?” Kickbacks. Same as it ever wuz . . . .
Re WSJ puff piece on Milly Dowler –
“It was the kind of news event that fell squarely in the tabloid’s sweet spot. Just two years earlier, the Sunday tabloid had led a campaign that ultimately produced new legislation in the U.K. to protect children against convicted pedophiles.”
This campaign was soundly condemned for leading to vigilante attacks on innocents.
And all the references to News cooperation. Please. Up until Weeting, News was in total denial and lockdown.
From July 11: “Key members of the family that controlled the Wall Street Journal say they would not have agreed to sell the prestigious daily to Rupert Murdoch if they had been aware of News International‘s conduct in the phone-hacking scandal at the time of the deal, reports Richard Tofel of ProPublica.”
How could they NOT see the sale to Murdoch as the end of any credibility their family enterprise had built over the years?
That would have been a mistake.
Murdoch bought the WSJ as a vanity play. Had he not bought it, the WSJ today would be valued at perhaps 15% of the price Murdoch bid.
Yves, you might be interested in thisarticle: “Europe’s banks could break us all
As Europe struggles to keep the euro and its banking system viable, instability there could come home to roost in the US.”
By Bill Fleckenstein http://money.msn.com/investing/europes-banks-could-break-us-all-fleckenstein.aspx
The battle over Greece was political. So is this one. The Europeans do not want to pay off the risk-taking bond holders. They’d rather give them all haircuts. There is good reason behind their attitude. If they print up the Euros (If they decided they could do this) to pay of the bondholders all of Europe is on the hook for retiring all those notes. But right now Europe does not offer itself up as this kind of tax base. Regardless, in order to soak all the Euros back up the Europeans will have to give up some of their social benefits. Because their tax money will have a higher priority, that of paying down the bondholders. Selling bonds that must be repaid by social austerity or some other financialization of society should be outlawed in all countries of the world. Such bonds are unconscionable to begin with. So if this brings down Goldman Sachs and dominoes off to all corners of American, Chinese and Saudi banking it could make the point. They can always use their credit default swap contracts as toilet paper.
Why do people continue to insist that it’s a political problem?
Was Argentina’s default a political problem that could have been solved had the Bush administration decided to front Buenos Aires billions in loans?
Of course not. Argentina and the US are sovereign nations, and it was not incumbent upon US taxpayers to bailout the non-competitive Argentine economy in 2001.
And today, it’s not incumbent upon the Germany taxpayer to bailout Greece.
If two “states” (or is it “nations”, “countries”, or even “ethnic groups” or ‘religious groups” – whichever, it doesn’t matter to the following thought anyhow) use the exact same currency for all of their (respective?) business, which is REALLY the sovereign?
Unlike Argentines and USians, who do not share a common currency, European blood – in the form of the Euro – flows through the veins of both Germans and Greeks: cutting a vein or artery would harm them both.
The Euro is the child of the world wars of the 20th century: and I for one hope that it gets stronger with time.
Let the moneychangers squeal!
He is one smart, articulate dude for sure.
But I’m not sure how I feel about that 1970s haircut. He looks like one of the Bee-Gees, but the grey is a little alarming. I think he could easily dye it sandy blonde and he’d look pretty cool with a surf shirt on.
My favorite is Gordon & Smith.
http://www.lastwave.com/t-shirts—short-sleeve/Gordon—Smith-Classic-Logo-T-Shirt—Navy-p42.html
Trouble in Paradise Wall Street Journal. These deals are Europe’s analogues to the Jefferson County sewer financing. Why do municipalities allow themselves to be talked into complicated deals with hidden risks to save (probably) 50 basis points?
Goldman shows them how. No? Its the finance specialists who have the knowledge resources to stealth gauge public acceptance and offer bribes and favors.
And, BTW, the bigger the disparities between middle class aspirations and the rich, the more civil servants are to corruption; favors -untraceable favors, promotions, public office, school admissions -you name it, the Goldman Sachs of the world have thought of it.
And then there are the threats. My own experience as an Aspen property owner when I went public with my objection to the terms of a municipal offer was that they threatened to turn the parking on the set back at the front of my house into a public parking lot.
Both Ambrose E-P and Yves Smith often speak of ‘deflation.’ But there is no deflation. In the most recent CPI report, CPI-U was up 3.6% year-on-year — same as last month. Not only is there no deflation, even disinflation is not apparent yet.
Bond wallah Michael Ashton expounds further on the theme:
http://mikeashton.wordpress.com/
Unlike in 2009, when the year-on-year change in CPI briefly dipped negative, there isn’t the slightest chance of a repeat in 2012, even if a bone-crunching recession should unfold.
The geniuses of J-hole [the Fedsters’ summer retreat] habitually forget that monetary policy works with a lag of 18 months or so. Stock prices began rising on the mere announcement of QE2, and collapsed when it ended. But that misbegotten liquidity is still sloshing around out there. Goods prices likely will respond to it on a more leisurely and extended schedule.
Hello, stagflation! Where ya been hiding for the last 30 years?
Growth does cause inflation. So do shortages. In fact stagflation is a product of shortages in things such as oil and food. Did you really not know this?
‘Inflation is always and everywhere a monetary phenomenon.’ —Milton Friedman
Did you really not know this, Ben?
A trip to your local library could be transformative.
A brilliant response. “Milton Fiedman said it, so I must be right”. You are familiar with the term ‘argument from authority’ , yes?
Wages are the most important cost the economy. Wages are deflating. The GDP deflator is running at 2%.
Producers are holding and increasing their prices for now to preserve margins when they have had increases in materials costs. Don’t expect it to continue.
That’s why I oppose QE3, which would fuel commodity prices without a commensurate increase in wages.
For 18 months I’ve asked inflationistas how the US can achieve sustainable inflation without wage growth.
“These deals are Europe’s analogues to the Jefferson County sewer financing. Why do municipalities allow themselves to be talked into complicated deals with hidden risks to save (probably) 50 basis points? ”
surely Yves you’ve seen the reason first hand—-Mr. Big shows up to Stillwater USA, plucks down his Amex and butters up Mrssrs. Bored with Family and Monotonous Life with some scotch, steaks and good ole boy/locker room talk.
Mr. Big has a new BFF and country mice just greenlit a contract that they literally don’t understand but smile and nod at.
It’s the updated version of the “Music Man” or its truncated homage, “Marge and the Monorail.”
will anything come from this news?
“(Reuters) – Oil trading data that exposed the extensive positions speculators held in the run-up to record high prices in 2008 were intentionally leaked by a U.S. senator, sparking broader concern about industry confidentiality as Congress moves on Wall Street reform. …”
http://www.reuters.com/article/2011/08/19/us-cftc-dataleak-idUSTRE77I4NR20110819
Why do municipalities allow themselves to be talked into complicated deals with hidden risks to save (probably) 50 basis points?
——————
Probably because they have been told to either ‘innovate or die?’
She is a VIC – very important chick.
How exciting! The new elite economic gods are coming to save us all!
Press Release… European School of Economics Launches the Visionary Leadership Foundation Program, an Educational Journey to Self-discovery http://www.prweb.com/releases/prwebeuropean-school-economics/visionary-leadership/prweb8734347.htm
A key message contained in the book “The School for Gods” whose author is Elio D’Anna, Founder and Dean of the European School of Economics, define the psychological and philosophical framework around which ESE’s Visionary Leadership Foundation Program is built: “If you believe in an external world, then make use of it. Let all the experiences, events and circumstances fall in a place within yourself where you can filter the most useful and eliminate what is useless. This is the place where all your inner rubbish can be transformed in energy and brand new life. But remember! The outer world is only a faded shadow of your inner space, a pale manifestation of your inner responsibility.”
Is economics really a form of religion in disguise? This press release seems to acknowledge that quite proudly. NEW AGE Economics is finally here…. “The Secret” is out.
Yves: From Last year’s INET, titled “Mathematical Models: Rigorously testable, Qualitative Metaphors, or Simply an Entry Barrier“
What happened to the Book Salon? The link takes me to an announcement page that then says there are no comments and at the bottom, says that comments have been closed.
http://fdlbooksalon.com/2011/08/20/fdl-book-salon-welcomes-gretchen-morgenson/#Respond
Thanks, your link worked.
Bond markets signal ‘Japanese’ slump for US and Europe Ambrose Evans-Pritchard, Telegraph. Ahem, yours truly made the deflation call as soon as it was clear the US would be cutting the Federal deficit.
Alternatively, yields could be indicating a truly massive bubble in Treasury paper.
Who in their right mind lends to a country that is running a tab of $100bn/month, at any price? Who does that at 2% for ten years or 3.5% over thirty? Obviously nobody who expects to get their money back.
Thank you, Central Bankers of the world, for subsidizing American taxpayers. Please, Mr. US Treasury, start issuing as many 30, 50, and 100yr notes as possible (preferably zero coupon) and retire the short end of the curve.
The SEC is suing a regional brokerage firm, Stifel Financial, for allegedly defrauding five Wisconsin school districts through a complicated derivatives deal. The brokerage firm, in turn, is suing the Royal Bank of Canada.
https://www.nytimes.com/2011/08/21/business/5-wisconsin-school-districts-and-3-ill-fated-securities.html?ref=business
That’s my man!!
Sen. Bernie Sanders Leaks Oil Trading Data: Americans Have A Right To Know Who Drove Up Gas Prices
http://finance.yahoo.com/news/US-oil-speculative-data-rb-4160467525.html?x=0&sec=topStories&pos=5&asset=&ccode=
Yves: Here’s a nice article on the rise and fall of Bill Browder, CEO of Hermitage Capital, which also nicely explains how his firm worked in Russia at realizing those greatly profitable deals that gave him 1500%/year profits.
Browder has gotten Congress to pass something called the “Sergei Magnitsky Rule of Law Accountability Act”, which, among other things, will bar entry to a number of people, including all of their spouses and children, to the US and other countries who take this act seriously. Magnitsky was an accountant who worked for Browder, who was at the time of his death imprisoned for tax evasion-related issues that Hermitage Capital was in. (Hermitage apparently filed its profits under the 5% tax for nationals rule, in stead of under the 35% tax for foreigners.) So Browder lost right of entry into Russia, and Hermitage sort of collapsed. And now Browder is pissed.
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great articles!!