Tuesday, May 31, 2011
Monday, May 30, 2011
Europe is playing for time. It's struggling to delay any Greek default long enough for other vulnerable countries to demonstrate they can handle their debts.Here's where it seems relatively simple to me, but isn't addressed in 99.99% of the pieces I read on the topic. There are two questions to ask, ones that are independent of scale. That is, they can be asked of your 10-year-old daughter, a corporate CEO or the head of a country.
- What are you going to do that people will be willing to pay for?
- How will you service your debts?
The more I read both theology and economics, the more I become convinced that we're living at the end of an age of denial.
Sunday, May 29, 2011
An intriguing aspect of their analysis is how it views the rising tide of debt around the world from a historical perspective. For so many countries to be groaning under so much debt at the same time is unusual, the authors say. More typical are the somewhat contained debt crises, like in Latin America in the 1980s or in Russia in 1998. While both of those episodes reverberated beyond the countries from which they sprang, today’s debt problems are far more widespread. And, as a result, more worrisome.Historical, yes, surprising, no. Globally, the Western world has become more and more secular, seeking salvation by proxy. Instead of you doing works of charity with your own life and money, you are forced to give money to the government who will do them for you. The end result is what we see today, massive debts created by separating giving from receiving.
The simultaneous buildup of very large public deficits and debt positions in virtually all of the advanced high-income countries “is a new element at work in the global economy,” the report says.
To the donors, the recipients are invisible, so politicians seeking to buy votes can convince them that the poor are deserving, no matter what destructive behaviors have become commonplace. To the recipients, the donors are invisible, so those same politicians can convince them that the donors aren't yet paying their fair share, no matter how much is being paid. There was no reason for the average person to want to slow the growth of these secular charities. To do so would be an act of greed or selfishness.
While we are observing the failure of an economic model, we're also observing the failure of the societal model that drove it. Salvation, both economic and spiritual, is personal, not collective.
Saturday, May 28, 2011
The mass rallies by the “Indignant” that were held on Wednesday and Thursday night in almost every major Greek city represent a new parameter in political developments. This is a new phenomenon, which in form mimics the initiative by Spain’s youth, but in essence is stoked by the impending local economic crash. The movement is spontaneous, ideologically multicolored and politically astray. Its demographics and the symbols used to represent it represent a great departure from the usual stuff seen in protests. Here we don’t see a configuration of many small, tight-knit groups -- or blocs -- and the “professional” protesters of the left; you see people who are novices at protests. Instead of banners and red flags, you see Greek flags and hear the national anthem. Moreover, there is no fire missing from the chanted slogans, which sweep aside political correctness in favor of a morally accusatory tone.Protest Video
General Odds and Ends
Here, I'm using Chesterton's definition of mythology - mysticism without philosophy or logic. That is, the crowd can't tell you how anything is supposed to happen, only that they want something to occur. In essence, they're praying to Zeus and Hermes. There's no end point here, no evidence that their gods have any power at all. They are simply crying out for mercy.
We have been frightened into believing that government debt is a bad thing...The public debt is the people's money? Huh? Does that make your credit card debt your kids' money? It's like she has lost all contact with reality here. She thinks we should borrow money and pay back our creditors with paper which is worth less than what we borrowed. I wonder if that works in her life.
The public debt is the people's money, and today the people are coming up short. Shrinking the public debt means shrinking more than just the services the government is expected to provide. It means shrinking the money supply itself, along with the ability to provide the jobs, wages and purchasing power necessary for a thriving economy.
When you deposit money in the bank, they, in turn, lend it to someone. That's how they make money. In essence, you're lending money to the bank. Well, by her logic, isn't that then the bankers' money? Why do they need to pay that back? Why should there be any results from that loan at all? When Ellen wants to make a withdrawal, the bank should just shrug and say, "It's the people's money, now, Ellen!" Maybe they could give her twenty cents on the dollar. I wonder if she'd like that.
Borrowing money is predicated on your ability to pay it back. Otherwise it's just stealing.
I'm done. Microsoft just lost another customer.
Friday, May 27, 2011
I left this photo fairly large because I liked the textures and geometry of the flower. It's like a burst of soft orange. It might be worth a click to see that larger version. Enjoy!
Thursday, May 26, 2011
MORELIA, Mexico—Fierce fighting among apparent rival drug gangs in western Mexico left 28 dead, while in a nearby state more than 700 people huddled in shelters after fleeing villages that had become battlegrounds.
The violence, which appeared to be unrelated, escalated Wednesday in the western states of Nayarit and Michoacan, where drug cartels have been warring for territory ...
Police found 28 men lying dead and four others wounded on the road littered with bullet casings from high-powered weapons and 10 abandoned vehicles.
Tuesday, May 24, 2011
* - In reality, it was a Green Lynx Spider, Peucetia viridians. Identification thanks to the Spider Identification Guide. You can read lots more about him here.
Monday, May 23, 2011
First up, they're ditching lots of regulations.
The Finance Ministry has made public a list of 136 professions that will be liberalized from July 2 as part of the economic reforms Greece has been encouraged to make by the European Union and the International Monetary Fund.Second, while dangerous to draw conclusions from a single paper's editorials, here's ekathimerini.com discussing the crisis.
The reform means that those seeking to enter these professions can do so freely, without restrictions on the number of people in the sector or limits on where they can set up their businesses.
The professions in the list published on Monday range from taxi drivers to beauticians but do not include some of the key so-called closed professions.
Notaries, lawyers and civil engineers will see their professions liberalized at a later date, yet to be set by the ministry.
The rapid deterioration in economic conditions has made it clear that changing Greece’s economic model will be more painful than previously thought.Corroborating this point of view is the Athens News' reporting from the inner sanctums of the EU.
The delays in overhauling and downsizing the public sector, which is key to changing the Greek economic model, will entail even greater economic and social costs than envisaged even six months ago if the government does not convince party loyalists in state-controlled corporations to accept privatizations and vested interests everywhere else to accept competition.
The head of the Eurogroup urged Greece to set up an independent privatisation body overseen by the European Union to bring down its ballooning debt level.People adapt. It may take them a generation or two to see how screwed up they were, but in the end, we all learn from mistakes and figure out what worked and what didn't. Unquestionably, the Greeks have made a mess of their economy, but it looks like the light is dawning on them. And lest we be too harsh on them, or on the Greek-like progressives in our own country, they smashed the place in an effort to be kind to the "less fortunate." They were trying to give security to all, not realizing that salvation, both spiritual and economic, is a personal thing. Now that collectivism has failed yet again, it looks like they're figuring it out.
Jean-Claude Juncker told German news weekly Der Spiegel's edition to be published Monday that the EU in future will monitor Greece's privatisation programme "as if we were conducting it ourselves."
Sunday, May 22, 2011
Unemployment is at 45% for these guys. They're demanding more jobs and more government spending. Umm, massive government spending is what they had been doing and it resulted in high unemployment like it always does. Logically, doing more of what you've been doing to get into the mess would seem to be a bad idea.
It's a sad sight to see. They're good people. They want to work. They want to be productive. Unfortunately, they've been brought up completely ignorant of where money comes from. Someone has done these folks a very great disservice.
Saturday, May 21, 2011
Friday, May 20, 2011
* - The restaurant's website is down. I wonder if they're still in business. Lovely owner, nice place to eat. I bought her seasoning and use it on fried chicken.
MADRID—Weekend elections that threaten to drive Spain's ruling Socialist party from power in several regions and cities also promise a potentially nasty surprise: the revelation of piles of undisclosed debt in local governments that could undercut the country's drive to avoid an international bailout.Elsewhere, it was reported that Spanish bond yields have jumped. Having a lot of debt makes you fragile. Increases in the interest rate you pay on your debt have larger and larger effects as your debt level grows.
Five months ago, a government change in Spain's Catalonia region revealed a budget deficit more than twice as big as previously reported. Now, a growing chorus of economists, local politicians and business leaders say that new governments are likely to discover, as Catalonia did, piles of "hidden debt" owed to health clinics and other suppliers.
Bad medicine, this.
Where I work, our regulations, processes, forms and restrictions have grown substantially over the last 5 years. The result is not, as the regulators might expect, control actually being ceded to the higher authorities who impose these regulations. Instead, there's a widespread cheating on our rules and regulations and general, unspoken lying about what's going on.
Increased regulation requires an increase in regulators to manage them. A regulation is only as good as its enforcement. If you don't increase the regulators, then all that happens is people lie and fudge and wink at the forms and processes and try to do what they were going to do anyway. Greece has discovered this as their black market economy has bloomed in concert with their preposterous regulatory regime.
I would argue that the more regulations you have, the less any one particular regulation is followed. It seems to be true where I work, but I wonder if it's really true across the world. If true, this would asymptotically approach anarchy as more regulations would lessen the power of all other regulations to the point where no one followed any rule at all.
Wednesday, May 18, 2011
My wife had decided to free feed her over the weekend and it seemed to work out well for everyone involved with one slight twist. Apparently, our Maximum Leader gorged herself to the point where the trigger for demanding more food was there, but she wasn't actually hungry. The spirit was willing, as it were, but the body was weak.
Tuesday, May 17, 2011
May 17 (Bloomberg) -- European finance ministers for the first time floated the idea of talks with bondholders over extending Greece’s debt-repayment schedule, saying that last year’s 110 billion-euro ($156 billion) rescue has failed to restore the country to financial health.Der Spiegel points out how they're doing everything they can to avoid facing the facts.
More than a year ago, they created a €110 billion ($157 billion) bailout fund for Greece. Since then, however, the likelihood of a government bankruptcy has only increased. The country's mountain of debts is growing, the economy is at risk of collapsing and the promised austerity programs are not progressing as planned ...Greece couldn't pay back its loans before the added loans from their "bailout" and they can't pay them back afterwards, either. Extending the life of the loans doesn't make it better, it just delays the inevitable. The Greeks are insolvent and that's a fact. If the EU wants to avoid a default, they're going to have to do what the Fed has done which is print money and hand it out at 0% interest. The other alternative is to blow up the EU entirely through a Greek restructuring.
"A restructuring of Greek debts is absolutely out of the question," says French Finance Minister Christine Lagarde, while Schäuble notes: "A debt restructuring is not under consideration and is completely speculative."
Instead, the European Commission intends to fight the crisis with new debts, even though government officials in European capitals are still denying this, as usual. There is talk of a €60-billion loan package, additional austerity programs and even tougher austerity.
As I understand it, these bailouts require unanimous consent by all EU members and the Finns, for one, won't stomach another. I can't see how a Greek default results in anything other than a break in the EU and that's why they're frantic to prevent it. They're like kayakers in rapids. They'll be able to control their path to some extent, but the end result is going to be going over the falls no mater what they do.
I just started using Catch to share notes, links and images across all of my devices and I love it. It's like a personal version of Twitter. In the past, when I took the dogs to the dog park, I'd sit and surf the web on my Droid 2 while they played. When I found something I wanted to blog or share with others, I'd email it to one of my accounts. Catch allows me to post it to my Catch account where I can pick it up anywhere. I can do the same for photos. Awesomeness!
Monday, May 16, 2011
I just spent three and a half days on my first Cursillo weekend and I'm not entirely sure what to say about it. A quick summary was that I shared a weekend with about 30 other Catholic men who were joining a movement to live a Christ-centered life, but that summary doesn't do it justice. In fact, until I've had a chance to write my way through what happened, I don't think I'll fully understand it. Even in that, I'm sure it will end up like a C. S. Lewis theology text and will require several runs through to even get to the 75% mark.
What I do know for certain is that it's a major inflection point in my life.
Sunday, May 15, 2011
Heading off for a weekend religious retreat. I'm looking forward to all of it save for the part where I can't have a laptop or my beloved Droid 2.
Three whole days without the Interweb Tubes. Pray for me.
Update: this should have been posted Thursday night, but the Blogger system was down.
Thursday, May 12, 2011
(T)he US is in a superior position for a separate reason. We own the printing presses for the currency in which our debt is denominated. Furthermore, that debt just so happens to be the reserve currency of the world.I've seen this on blogs and in pundit pieces from both left and right and it reminds me of the story of the frog being slowly boiled. Up until the point where it expires, the frog feels things are just fine.
We're now at the point where people blandly talk about printing money to solve our debt problems as if that's no big deal at all.
Wednesday, May 11, 2011
In any case, here's a bug I found in my house the other night. I took about 12 shots of the stupid thing and this was the best of the lot. Between the drastic contrast, the wretched ambient lighting and the focal length of my shots, I managed to get the bug, but not fully in focus. It gave me an even greater appreciation for Tim "Karl Theodor Ernst von Siebold" Eisele.
Click on the photo for greater detail. Despite my bungling, I think it's worth the effort.
* - Mexican Feather Grass is small, so it's really not a thicket. Maybe it's a thicketette.
Tuesday, May 10, 2011
The Calafia Beach Pundit thinks that the end of QEII is a good thing for free market reasons.
In short, instead of worrying about the end of monetary "stimulus" and fiscal "stimulus," we should be cheering. Misguided stimulus is bad; ending it is therefore good. The economy is struggling under the weight of too much "stimulus," and it needs a break.In response to them, I offer this chart from yesterday:
Greece and Ireland and Portugal obeyed the standard economic models until a few months ago. Now they're simply deadbeats on the run from their creditors.
As a private citizen, you can borrow money on your home, your credit card, your paycheck and who knows what else. Up until the first debt collector calls you, there are all kinds of models and spreadsheets and budget programs that can convince you things are going to be OK. After that first call and your first series of late payments, those models and charts and equations don't mean anything. In the case of a government, once bondholders decide they aren't going to get their money back, they flee.
See chart above.
Economic models are great when things are relatively stable, but gargantuan debts relative to your income make things highly unstable. In the Calafia Beach Pundit's post above, I left this in the comments.
My problem with the end of QEII is not interest rates but volume. Just who is going to buy $100B of Treasuries every single month? Every month is going to be a rollercoaster with ups and downs driven by random world events. The volume of the debt will make the system unstable and investors panicky.I don't think QEII was actually instituted to keep interest rates low, I think it was instituted because the Treasury got cold sweats wondering who was going to buy endless cataracts of debt and with good reason. Keynesian economics is stable until it's not and compassionate nations all around the world are finding this out.
Monday, May 09, 2011
Like these two: rewoo and rezap.
Rewoo: "Say, Mark, after your rowdy and rude behavior at the party last night, Maria is really mad at you. Looks like you're going to have to rewoo, old buddy."
Rezap: "Good Lord! The Marlokian ambassador is getting back up! You'd better rezap him before he has a chance to activate the Thrombolian Device!"
Greece is doomed to default, err, restructure. They are now paying credit card interest rates on their ever-increasing debt.
When that happens, banks all over Europe are going to suffer major losses to the tune of tens of billions. Some might even fall. Who has exposure to that? Who has exposure to the exposure?
Hypothetical scenario with company names and amounts pulled out of the air: Say you manage a big mutual fund and you invest in Caterpillar. They've got their pensions invested in Wells Fargo. Wells Fargo has huge loans to Deutschebank. Deutschebank has $8B in loans to Greece. Greece decides to blow off it's creditors, err, restructure it's loans and Deutschebank takes a mortal blow. Wells Fargo's loans are now worthless. Caterpillar's pensions take a huge hit because Wells Fargo's stock tanks. Your investment in Caterpillar is now deeply underwater because they were caught up in the chain reaction of Greece's collapse.
Is that scenario real? Who knows? How many linkages do you have to trace to figure out whether or not you're exposed to the Eurosocialist implosion? Instead of sitting out there waiting to get killed, it would be a better thing to park your $$ somewhere safe and sit it out. It won't take long for the whole thing to blow over, probably 6 months or so. One place you can be reasonably assured of holding on to most of your value is buying short-term Treasuries. Since you're not going to be in them that long, their appalling rate of return isn't a big deal. There's no worry about price, either, since there's a never-ending supply of the things.
Best to park your cash for a little while and once the dust clears you can sell them (or not roll them over) and get back into the market.
There. That was just a little thinking out loud as I wandered through my normal morning reading. I'm not doing this with my money nor do some of the giants like PIMCO seem to be doing it. It's only a little thought exercise to try to understand how things work. Or not. :-)
Sunday, May 08, 2011
May 8 (Bloomberg) -- European Union officials may require Greece to provide collateral for aid as policy makers struggle to prevent the euro area’s first sovereign debt restructuring, said a person with direct knowledge of the situation.All of this is a huge example of overthinking the problem. Greece borrowed too much money, more than they could pay back. They didn't borrow it so that they could turn a profit with it by building more industry, or if they did it was an abysmal failure and something which should have been recognized right away. Instead, they borrowed it to pay their people more than they were worth.
Expanding the 110 billion-euro ($158 billion) lifeline Greece received last year may mean that assets or revenue from asset sales are used to secure extra funds, the person said. Demanding collateral, an idea floated last year by Finland, may help avoid a political backlash against bailouts.
In essence, Greece was your shiftless brother-in-law and you loaned him money so he could take vacations. The Euro solution has been to successively loan him still more money with the conclusion of each loan being renewed surprise that he can't pay you back. That would have been a stupid idea for you to do and was an equally stupid one for the European banks, investors and ECB.
All the Keynesian explanations in the world, all of the graphs and charts and equations in all the textbooks serve only to temporarily obscure the fact that loaning money to people who can't show a profit in short order is a stupid thing to do. It's that simple.
Saturday, May 07, 2011
Lacking such a foundation, a strip club is predictable, boring and trivial. I wanted to hear the girls' moral views and what they had to say about single motherhood or how they rationalized abortion. Instead, we get interviews that could have been done with apes millions of years ago, had apes been able to talk. It's basic biology and exploitation put to prose.
I also wanted to hear how the managers differentiated themselves from sex slave owners and how both they and the girls compared themselves to Uncle Toms. The life of a pole dancer is much nicer than that of a sex slave while their job descriptions are almost identical. None of that was forthcoming and Susannah seemed bored by the thing, which seems to have been the point in the first place. Making journalism sausage, it turns out, is a real yawner.
In any case, the article ends with Susannah wondering why her series on Journalism has been so popular with younger (J-school?) readers. When answered, her reaction contains an enthusiastic endorsement of one of the reasons they like her work:
I like the part about how this generation doesn’t want a boss, they don’t want to play by the rules, they want to be out crawling around and finding things out for themselves.The scientific analysis that led to the writing of Talent is Overrated utterly destroys "not playing by the rules" and "not following the rules". Such an approach to life is a recipe for mediocrity at best and slovenly failure at worst. As a counterexample, I offer this interview with Jerry Rice.
Here are Jerry's credentials. Jerry played by the rules and had bosses whom he followed willingly. Dittos for concert violinists, priests like Father Boyle and just about any superstar you might want to name. "Not playing by the rules" is all nonsense. "The rules" represent millennia of human learning. As G. K. Chesterton pointed out, tradition is giving our ancestors a vote in how society behaves. Throwing it out is an act of temporal snobbery. It's thumbing your nose at the great thinkers of the past and closing your eyes to time-honored ways of self-improvement and achievement.
Not to worry. The days of "not playing by the rules" are almost over.
Friday, May 06, 2011
For the most part, the book is easy driving in the Audible version. It tells of his life growing up and a little bit of his time in the Great War. It ends with his experiences as a teacher of philosophy. Only those experiences that apply to his conversion are included. At times, he goes into a logical deconstruction of how those experiences were internalized and analyzed to produce his world view. When he tells stories from his life, the jeep is running across solid ground. When he dips into philosophy, you've got to get out and push the thing.
For that reason, you need both species of his work. I listened to chapters 13 and 14 yesterday while driving in the car, but had to come home and read them last night to really understand what he was saying. I'm still not completely there, but I'm close. I'd read the book about 6 months ago and had the same problem in reverse. The stories from his life left me unprepared for the hard slogging of the philosophical parts.
I'm going through St. Augustine's The City of God right now on audio only and it's much the same. While he's refuting pagan critics following the sack of Rome, it's easy driving. As soon as he gets into theology, you're pretty much done and have to find a solid copy of the book so you can get out and push.
Despite the need to flip back and forth from time to time, and the need to buy two copies of these kinds of books, I'm finding this an excellent way to muddle through philosophy and theology. The Audible version keeps you interested enough to want to push your jeep through the mud in the deeper parts.
Thursday, May 05, 2011
Unemployment was low during the time of high inflation. It wasn't until the Fed stepped in to crush inflation that the job situation got bad. For this reason, I think it's a bad idea to draw conclusions from the 1970s about what's going to happen this time. Here are some random, untested thoughts to mull over:
- Housing wouldn't seem to be a hedge against inflation at all. Prices are set by supply and demand. There's still a ton of foreclosed houses out there which haven't been released onto the market and with unemployment as high as it is, there is a smaller than usual pool of potential buyers.
- Any firm that sells things that aren't necessary is going to suffer. After paying more for food, gas, clothing and housing, there's going to be a lot less left over. Atlantic City and Las Vegas, Macys and Nordstroms, high-priced restaurants are all going to take it on the chin.
- Government bonds are going to be dumped and that's a fact. Only an idiot would hold on to bonds that are paying 3% when inflation is at 8% or higher. How this doesn't end up in QE III is beyond me. The government has been borrowing with mostly short-term bonds, so they're going to be revolving a HUGE amount of debt every year. Trillions of dollars worth of bonds are going to come due and we'll have to refinance at the higher rates or simply print more money and have the Fed buy them resulting in ... yet more inflation.
- Stocks would seem to be a bad place to be as well because I can't figure out how anyone is going to make any money in this environment other than the discount retailers and the folks what make necessary consumables like oil and food.
- I have no idea what to do with gold. That's such a charged topic and I know so little about it that it seems pointless to touch it.
- Companies with a lot of debt are going to suffer. Interest rates are going to rise and with it, interest on corporate debt.
Update: Would it make sense to use your disposable cash to retire all the debt you could? I think that some mortgages (all?) can be called due at any time. If you had no debt, you'd have no exposure to panicky debtors whose own bills are eating them alive.
Wednesday, May 04, 2011
Greed is the problem.
Accommodation makes sense only if the economy is reaching a steady state. But the clearer the vision becomes, the further away it seems. A steady state economy will be politically possible only if we can be persuaded to stop grabbing.Accomodation refers to the act of developing sufficient "clean" energy sources and infrastructure to support the economy. Leaving aside for the time being the nonsense about "clean" sources, we come to the root of the problem: all of you out there who want something they don't have need to stop it immediately. Of course, if what you want is for me to agree with George Monbiot, that's OK.
Greed comes in lots of forms. It's shorthand for wanting more of something. George limits his definition of greed to material things, but he's larded up with greed just like anyone else. His entire career is filled with greed. The guy is a writer and an editorialist at that. George is greedy for people to think like he does. George wants you to buy his newspaper or patronize his advertisers so he can continue writing to convince more people that he's right. Greedy, greedy, George!
Credit cards, car loans and even mortgages allow people to consume now and pay later. The price is interest -- and mounting debt for the incautious -- so there's a financial argument to be made for saving up and paying cash whenever possible. But there's a happiness argument, too. Consumers who buy right away on credit rob themselves of a free source of enjoyment: anticipation ... Delayed pleasures are just as intense, and consumers accrue additional pleasure by looking forward to them. Think of it as "compound happiness" interest.I can remember the delightful anticipation in my youth when I saved up to buy games or fish and plants for my aquariums. Unable to buy on credit, I was always longing, in a pleasant way, for another fish tank so I could breed my fish, sell them and use that money for other things. In retrospect, having to save up for things didn't just give me happiness from looking forward to my purchase, it made me more creative as I found new ways to get to my goals quicker.
Excitement unbounded! Well, for me, at least.
Tuesday, May 03, 2011
Monday, May 02, 2011
I watched my Newcastle team get blanked by Liverpool last night. Ball after ball got launched right into the penalty box by midfielders Joey Barton and Jonas Gutierrez. Nothing. It was as if the strikers weren't even there.
Job well done, Mr. President. His decision to increase our presence in Afghanistan over the objections of members of his own party took courage and has paid off, big time.
Sunday, May 01, 2011
Question: When QE II ends, that is, when the Fed stops printing unbacked dollars and handing them to the government at the rate of $100B per month, what's going to happen? Note that the magnitude of the borrowing will remain unchanged.