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Links 9/21/11

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We Incorporate Genetic Information From the Food We Eat, New Study Finds Popular Science (hat tip reader Aquifer)

Guinea pig repo markets in everything the culture that is Swiss Tyler Cowen (hat tip Richard Smith)

Baby, You Gotta Have Balls OnEarth (hat tip reader Robert M)

EPA Quashes Cattle Barons’ Dreams of “Better Fishing Though Chemistry” PatriotBoy (hat tip Lambert Strether)

Typhoon Passing Tokyo, Heading To Fukushima Bloomberg

Australia needs a Tobin tax MacroBusiness

Don’t expect China to ride to the euro’s rescue Yao Yang, Financial Times

Slovenia deals another blow to euro bailouts Ed Harrison

Why breaking up is so hard to do Martin Wolf, Financial Times

Meanwhile, Greece Isn’t The Only Place Where Austerity Is Failing Clusterstock

Phone hacking: Ted Turner says Rupert Murdoch will have to step down Guardian (hat tip reader Buzz Potamkin)

US accused of unfair antitrust tactic Financial Times

Class war! Economist (hat tip Richard Smith). Wow, this is out of character. Then again, it’s on the blog, not the magazine proper.

Confused? James Kwak. On Obama’s deficit cut math.

Politicians dodge the details in US tax debate Financial Times

Home Forecast Calls for Pain Wall Street Journal. So now it’s finally official?

US Housing Hangover Or 20-Year Japanese Nightmare Testosterone Pit (hat tip reader Carol B)

Russian Ripoff Michael Hudson (hat tip reader xct)

Focus on Goldman Ex-Director Wall Street Journal

OccupyWallStreet. Per Richard Smith, the invisible protest.

Antidote du jour. From Nap Tiem (sic):

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39 comments

    1. Externality

      Despite your evident contempt for them, the people of Slovakia and Slovenia are represented by leaders who actually seem to care what their constituents think. The people of Slovakia (2010 per capita GDP(PPP) = $22,195) think that they should not have to bailout Greece ($28,496) or other countries such as Ireland ($39,492). http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

      That is more than Americans can say. When Wall Street wanted a bailout in 2008, our elected “representatives” gave it to them despite intense public opposition. Even now, when Wall Street wants something, they usually get it regardless of public opinion.

      1. Jim Haygood

        Lighten up, my man! Actually I’m mocking americanos who don’t know the difference between Slovakia and Slovenia.

        No offense to Slov**ians implied. Now if I could just figure out the difference between Austria and Australia … *sigh*

        2. Susan the other

          whereas Borat was about a geeky annti-semitic Kazhak (sp?) but filmed in a very impoverished little one-horse town in Romania…

        3. Externality

          I referenced Slovakia in response to its being extensively discussed in the article you quoted from and your 7:29 a.m. post that

          The Prime Minister Borats of Slovak-Slovenia will never go for it.

          http://www.nakedcapitalism.com/2011/09/links-92111.html#comment-474753

          While Slovakia and Slovenia are obviously different countries, Slovakia’s much lower per capita GDP(PPP) makes it a better case than Slovenia to illustrate the fact that the EU wants countries that are poorer than Greece to help bailout Greece and that the poorer countries are objecting. (Slovenia’s per capita GDP (PPP) is $28,073, slightly less than that of Greece.)

          1. TunoInCA

            I wouldn’t hold my breath while waiting for Americans to learn to differentiate between Slovakia (population 5.5 million), and Slovenia (population 2 million). Might as well see the humor in the confusion. (I’m not sure I’d be able to keep it straight if I weren’t 1/4 Slovak.)

          2. MyLessThanPrimeBeef

            Lubliana, that’s the city with 3 closely spaced bridges next to its city center, right?

            I think I saw it in one of Rick Steves’ Travels in Europe episodes.

  2. Jim Haygood

    Martin Wolf in the FT:

    Would [a Greek default] mean forced exit from the eurozone? The answer is: no. This is a point made by Willem Buiter and Ebrahim Rahbari of Citi in another interesting paper. Exit would indeed happen if nothing were done by the rest of the eurozone, including the European Central Bank, to recapitalise and reliquify Greek banks. The creation of a new currency would then become inevitable. But Greece’s partners could well prevent such an outcome.

    Should Greece actively seek an exit, in its own interests? Here economists are at odds. Mr Buiter thinks a currency devaluation useless, arguing that it would be eroded by inflation. Mr Roubini thinks it essential. I am with Mr Roubini. Greece has both a huge current account deficit and a depressed economy. A big real depreciation is required. It is far easier to achieve this via currency depreciation than cost deflation.

    What makes Buiter think that Europe is going to generously recapitalise Greek banks after a default, when its members can’t even agree on doling out another bailout tranche before default?

    It’s fantasical, isn’t it? The Prime Minister Borats of Slovak-Slovenia will never go for it. Even a ‘prepackaged default’ with DIP financing is unlikely to ratified by 20-something national parliaments, and wouldn’t be worth the paper it’s written on.

    Of course a currency devaluation will produce an inflationary pop. That’s how you stop the pain of deflation, in one huge surge of relief — AHHHHHHHH! More please, kind sir! But if correctly managed, it will also produce a mighty surge in inbound capital flows.

    Ever wanted to own a vacation house on a Greek island? Greek property will be one of the great contrarian buys of the century, after the default … if you’ve got a suitcase full of hard cash.

    OPA! Let’s break some plates and dance!

    1. Externality

      Despite your evident contempt for them, the people of Slovakia and Slovenia are represented by leaders who actually seem to care what their constituents think. The people of Slovakia (2010 per capita GDP(PPP) = $22,195) think that they should not have to bailout Greece ($28,496) or other countries such as Ireland ($39,492). http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

      That is more than Americans can say. When Wall Street wanted a bailout in 2008, our elected “representatives” gave it to them despite intense public opposition. Even now, when Wall Street wants something, they usually get it regardless of public opinion.

    2. rotter

      “What makes Buiter think that Europe is going to generously recapitalise Greek banks after a default, when its members can’t even agree on doling out another bailout tranche before default”

      Ultimately, their 50 karrat gold plated, stuffed with truffle and goose liver GREED.Do you think they will just hold their ears, turn thier backs and pretend 12 million people and 51,000 sq miles in the middle of Southern Europe dont exist?

  3. ex-PFC Chuck

    Re “Baby, you gotta have balls:” My imagination works overtime envisioning a young woman checking out her prospective mate’s AGD.

  4. Juneau

    The study on incorporation of genetic information from our food is interesting in light of yesterday”s discussion on obesity. I have no issue with the idea that overeating and sedentary lifestyle causes weight gain but…

    I have read that profit margins for those raising food (animal, vegetable or whatever) for sale are improved if the edible item can be raised or grown quickly and with a large output from a given input. In other words, if we can get chickens to grow bigger more quickly, get corn to grow bigger more quickly, etc…. those making our food can make a living.

    What if we are incorporating these growth mRNA when we eat? Could that contribute to obesity too?

    Wild stuff. Best wishes

    1. Pelle Schultz

      Where to begin…

      The study in question concerns miR168a, which is a microRNA. It targets the mRNA (distinct from microRNA, which is a tiny processed piece of a noncoding RNA) that encodes the argonaute protein, which in turn directly regulates microRNA production. In other words, it’s an auto-regulatory loop. miR168A is highly conserved in all plants as well as animals. It’s in everything you eat. It always has been. You (and all other animals/plants/fungi that have ever lived) have evolved to deal with this. Do not be alarmed.

      The publication in Cell Research (a pretty obscure journal) is interesting, but hardly definitive. None of the work was done in a true in vivo system–it mainly involved blasting colossal amounts of DNA/RNA into cell lines. The mouse liver study involved introducing exceedingly high levels of a supposed miR186a inhibitor. Weak stuff.

    2. MyLessThanPrimeBeef

      For all peace lovers.

      Eating itself, not just what you have to do to secure food, is an act of resource-related war.

      You make war on another living organism, an apple, for example, conquer it, put it in your moutn, chew it, ravage it, and finally pillage its energy resources, like fat, protein and carbs.

      And like all wars, you capture their (other humans’ or your food’s) survivors and genes.

      Just remember, eating is an act of war…an act of violence, all that biting, chewing, grinding, involving all sorts of biological and chemical weapons.

    2. Valissa

      WOW! That’s an interesting projection. To me that blog’s attitude seems to reflect the same disgruntlement I’ve heard from many independents as well as aggravated paleo-libs and paleo-cons.

      1. MyLessThanPrimeBeef

        Speaking of Palin, is Palindome a dome that looks the same from the front as it does from the back?

        Also, what are Palindrones? Are they speeches that sound exactly the same when play backwards and forwards?

        Is it too much to hope that someone has a list of the all-time top 10 Palindrones from around the world? Oh, Bummer, No hope.

  7. xct

    Between 1995 and 2009, the Franco-Belgian bank Dexia Crédit Local(DCL) sold €25 billion worth of so-called “structured” loans based on fluctuations between exchange rates for the Swiss franc, the euro, the yen and the dollar. At first these loans are offered at very low interest rates, but then “it becomes a mad world in which every global event with economic repercussions can drive up the cost of reimbursements for a French city,” notes Libération.

    JP Morgan thus earned a profit of €712 million, Royal Bank of Scotland €676 million and Goldman Sachs €507 million. “If there is one field in which one must deplore that imagination took power without ever wanting to assume the responsibilities, it is finance: the citizens of the communities concerned will have to pay for twenty years for the nutty creativity of banking sector hotshots.

    http://www.presseurop.eu/en/content/news-brief-cover/972131-banks-lend-communities-pay

  8. Abe, NYC

    With all respect for Michael Hudson, the article makes a lot of factual mistakes. State-owned residential real estate in Russia and other Soviet republics was, indeed, “privatized”, i.e. turned over to the tenants. Lending by Western banks to citizens certainly did not result in the mid-90s real estate bubble (it probably did in the current bubble). Privatization of industry is another matter.

    Also, while inequality in Russia and many other ex-Soviet republics has grown dramatically in recent years, real median incomes have been on the rise. It’s probably wrong to describe today’s Russia, Azerbaijan or Kazakhstan as impoverished. Of course, their very real real estate bubbles have not collapsed yet, but even in the Baltics – where they have – there is a lot of suffering but the standards of living are hardly comparable to what they were 20 years ago.

    So the reality is not black-and-white, it’s a bit more complicated.

  11. Billy and his dog Spot

    Here’s how the game “Class Warfare” works:

    The popular kids get to pick the class warriors. The bottom 6 billions people don’t get picked at all.

    Then the class warriors wage class war against the people who weren’t picked, ruthlessly exploiting them and driving them as slaves to the point of starvation.

    When the slaves try to defend themselves, the class warriors all shout together “Class Warfare!” And then they make the slaves fight each other and kill each other in a World War.

    The end.

  13. Hugh

    The three great issues of our time are kleptocracy, wealth inequality, and class war. Yet a year ago it would have been thought extreme to mention any of them. Now on a blog like this one they have become accepted usage. And they are seeping out into the rest of the blogosphere and into the mainstream. I see this as a very positive development. To confront our problems and begin the process of solving them, we need to know what they are. It also shows how a few good ideas put forward by even a small number of people can change the terms of the national debate. I do not mean to say that this is a complete victory but it is a promising start.

    1. Sufferin' Succotash

      That’s precisely why we need a really really big WAR to get peoples’ minds off such dangerous topics.
      Well, it worked in 1914, didn’t it?

    2. MyLessThanPrimeBeef

      I’d like see a list of the top 10 kleptocrats of all time.

      I wonder if it’s in the book, ‘5,0000 years of Kleptocracy?’

  14. Susan the other

    The lovely dancer on the back of the bull reminds me of the Minoan tribute. And now the labyrinth-of-the-day is Manhattan.

  16. MichaelC

    Despite the teaser headline, this NYT Deal Book piece drove me to distraction, (even though it ends up shooting the last “Market Making is not prop trading ” man standing straight between the eyes, if you actually read it with an objective eye).

    UBS Scandal Is a Reminder About Why Dodd-Frank Came to Be

    http://dealbook.nytimes.com/2011/09/19/ubs-scandal-is-reminder-of-why-dodd-frank-came-to-be/?ref=business

    Early on it makes a superficially reasonable observation:

    While the industry has been lobbying aggressively to temper those regulations, the rogue trading case could give proponents of the so-called Volcker Rule, which would prohibit proprietary trading, more ammunition. UBS, which stands to lose $2.3 billion on the unauthorized trades, said in its initial four-sentence announcement on the incident that “no client positions were affected.” The implication was that the trader was using company money to place his bets.

    Then it reverts to the tired canard ‘ But what is prop trading?’ :

    “As fodder for advocates of tough regulation, the UBS case is a SOMEWHAT AMBIGUOUS EXAMPLE (emphasis mine). The London police have charged the trader at the center of the scandal, Kweku M. Adoboli, with fraud and false accounting.

    If the accusations prove to be true, the Volcker Rule — named after Paul A. Volcker, the former Federal Reserve chairman — would not necessarily prevent the same situation from happening at an American bank. The regulations are intended to curtail speculative bets by a company, rather than stop the criminal acts of a single person.”

    It concludes with on the despairing, industry stenographic “Oh Dear. But who can define prop trading?” note .

    Lovely BS and artfully conflated nonsense.

    First : Who can define…? Well, I can, and beg your patience while I repeat it (but this time with an assist from the UBS CEO)

    A prop position occurs when the residual position of a customer trade is offset with the hedge to that trade. Full Stop.

    Prop trading, as I’ve argued ad nauseaum here is a supremely simple thing to measure and ban. This particular prop trade would never have been put on in a properly functioning Volcker rule world.

    Thanks to UBS we can take this definition of a proprietary position to the bank (apologies: lame pun intended)

    UBS confirm that the residual position on a client facing desk is a (unauthorized- hmm) proprietary position.

    The fact that the UBS ‘hedge’ was bogus highlights THE fundamental control breakdown that will inevitably occur on any desk that touts itself as purely market making or client serving.

    This is the control risk the Volcker rule resolves.

    The systems and controls required to support the fantastic argument that reasonable net market making/client servicing residual position alone are tolerable has been proven, once again, to be pure fantasy.

    Don’t take it from me. UBS CEO explicitly confirmed that no system exists that can protect against clever lads who understand very well what a prop trade is. No matter what desk they’re sitting on. (especially if they clawed their way out of the back office, more so if from social obscurity)

    So despite the Sorkin team’s characterization, this is NOT an ambiguous example at all. In fact, it’s a perfect and timely example of why the Volcker (and Vicker’s proposal) will reduce this kind of catastrophic and potentially systemic risk.

    PS
    I laughed my ass off (ruefully) at this loony bit:

    “The regulations are intended to curtail speculative bets by a company,” (by prohibiting speculative bets at govt backstopped ‘companies’)

    “rather than stop the criminal acts of a single person.” (which single person would not be employed by said institution, precluding the institutional speculation at his employer).

    Maybe it’s just me but restraining companies that reward criminally inclined employees (till they lose), even on the theory that it takes a crook to catch a crook, isn’t such a radical idea. At the least it’s not too radical to suggest these don’t qualify as gov’t (backstopped) jobs.

    End of rant.

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