Weekend Economists' Harvest Ball September 21-23, 2012
That's a nice, ambiguous title, don't you think?
It could be a typo, and the proper spelling is "bawl", for example. When I contemplate the fact that this week I worked outside of the home 16 extra hours (meaning a corresponding 16 hours' loss for home, condo work, SMW, and WEE), plus it was board meeting Tuesday, I would be bawling if I weren't so tired and monumentally confused. 
Or it could be "brawl", as in goings on in the financial world. Oh, they haven't broken out the artillery (yet), but the central bankers are printing as if their lives depended on it, while the banksters are frantically searching for something that isn't going down the minute the sovereigns let up on the gas.
Or we could just go with the given, and celebrate the end of 100+ temps and perhaps the end of the drought, in spots at least, and probably only temporarily, but we'll take what we can get.
http://3.bp.blogspot.com/-Qsn5P44F674/Tn0VEDwAUTI/AAAAAAAAAdo/PW6FKdR-PJw/s1600/Happy+Autumnal+Equinox.jpg
Let us know your thoughts, post music, art, and scandal, economic or not...
= new reply since forum marked as read
Official high 100 at 4 p.m. Currently 6 p.m. and 98.
Still a bit sticky, though, with 11% humidity. 
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likely heading next, if it doesn't double back towards the South-West, East or North-East towards Portugal and/or Spain as a very strong post-tropical storm.
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But it could head South-East towards these islands.
At the moment, on this island, all is calm and still, very warm, humid, airless. The sea water is also very warm. It would be nice to receive at least a band of torrential rain to refresh this arid island for the first time since last winter.
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It is of note, given the Arctic situation, that we do have a large persistent oscillation of the jet stream looping down this way right now.
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At the moment, we have rain bubbling up the African coast from the tropics:
Overnight steady rain over the oriental islands, the first rain this year. There was little rainfall last winter so we are in an eighteen-month long drought here.
Fuerteventura, Sept 24 2012
Rain falls on arid island
Palm trees drink, birds preen
Shoots sprout, wet petals
Mischieviously fecund.
Ben Bernanke and Mario Draghi must be absolutely terrified. These two men, in the last two weeks, have both initiated open-ended bond buying programs. The purpose of these programs, aside from keeping insolvent banks in business, was to scare the markets into believing that no matter what happens, the Central Banks will be able to step in and support the financial system. From a philosophical standpoint, this was Draghi’s and Bernanke’s “all in” moment. I won’t say they they’ve gone “nuclear,” as they have yet to truly monetize everything, but they’re not far from that.
And they’ve both failed.
Spain, which I’ve been warning will bring about the break-up of the Euro, saw the yields on its ten-year bonds break back above 6% yesterday. This is absolutely extraordinary. It indicates that within two weeks of the ECB announcing it’s going to do an “unlimited” bond purchasing plan, Spanish bonds are once again imploding. Indeed, if you analyze the Spanish ten-year yield chart from a technical analysis perspective, you’d say that it’s bounce off former resistance (indicating that it’s now support) and is ready for the next leg up (north of 7% again).
This is Game Over for the ECB. The ECB cannot announce an even larger program now as that would completely destroy its credibility in the markets. Congratulations Mario Draghi, the markets were intimidated by your promise of unlimited bond buying for a total of less than two weeks.
On the other side of the pond, Ben Bernanke is rapidly approaching his own Game Over moment. The US Federal Reserve bought roughly three quarters of all Treasury issuance last year. Let that sink in for a moment. Roughly $0.74 out of every $1 in debt created by the US in 2011 was bought by the US Fed… not by the bond market, not by foreign countries, but by our own Central Bank. Despite this massive intervention, the US economy (according to the ECRI) has officially re-entered a recession. This is why the Fed announced QE 3 now, because Bernanke is growing truly desperate, both in terms of losing control of the markets and the potential of losing his job if Mitt Romney is elected President. So the Fed chose to monetize Mortgage Backed Securities this time around. And the result is that the US Treasury market is tanking. If it takes out its trendline, things will get very ugly very fast.
Here’s a thought… what happens if the Treasury market begins to implode despite the Fed buying roughly 75% of all Treasury issuance? GAME OVER for Bernanke and the Fed. The only option left would be to monetize everything, which would mean hyperinflation (all hyperinflationary episodes have been created by monetization of deficits… you can pull this off until you lose credibility… at which point you suffer a currency crisis). Congratulations Ben Bernanke, you’ve managed to screw up the capital markets so badly that the US is on the verge of its own European-style debt crisis… despite you taking over the entire interbank money-market and nearly all US Treasury issuance. Folks, this is the reality we’re dealing with. The ECB and Fed have gone “all in” in their efforts to stop the debt implosion… and they’ve failed. All they’ve done is unleashed an even more serious inflationary storm than the one we were already facing.
I’ve read countless news headlines recently about how economists are “surprised” over an “unexpectedly bad” economic indicator. But it’s not surprising at all. It’s no mystery. The government hasn’t taken the necessary actions, and has instead been doing all of the wrong things. Let’s recap:
The leading monetary economist told the Wall Street Journal that this was not a liquidity crisis, but an insolvency crisis. She said that Bernanke is fighting the last war, and is taking the wrong approach. Nobel economist Paul Krugman and leading economist James Galbraith agree. They say that the government’s attempts to prop up the price of toxic assets no one wants is not helpful.
The Bank for International Settlements – often described as a central bank for central banks (BIS) – slammed the easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, “the use of gimmicks and palliatives”, and said that anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts “will only make things worse”. BIS also cautioned that bailouts could harm the economy (as did the former head of the Fed’s open market operations). And BIS warned that the Fed and other central banks were simply transferring risk from private banks to governments, which could lead to a sovereign debt crisis.
Virtually all leading independent economists have said that the too big to fails must be broken up, or the economy won’t be able to recover. Instead, they have been allowed to get even bigger. While modern economic theory shows that debts do matter, the U.S. is spending on guns and butter like debts are a good thing.
Nobel prize winning economist George Akerlof predicted in 1993 that credit default swaps would lead to a major crash, and that future crashes were guaranteed unless the government stopped letting big financial players loot by placing bets they could never pay off when things started to go wrong, and by continuing to bail out the gamblers. (Not only has the government rewarded the gamblers, bailed them out and let them engage in a new round of risky betting, but it hasn’t even reined in credit default swaps.) And instead of trying to restore trust in our financial system – which is a prerequisite for any sustainable economic recovery – Summers, Geithner, Bernanke and the boys have tried to sweep the problems under the rug and con the public into believing that everything is okay and that no real reform is needed....And – instead of rebuilding the real economy – the boys are simply simply rebuilding the house of cards...And while stopping the rising tide of unemployment is key to reversing the financial crisis, the government hasn’t done much at all to staunch the loss of jobs.
MULTIPLE SUPPORTING LINKS
Last edited Fri Sep 21, 2012, 11:55 PM - Edit history (1)
Baker StreetIt's so hard, baby.
^ for those who insist on Gerry.
***SNIP
This is from the partial transcript sent to us by CNBC.
RAY DALIO: I don't know whether we're beyond the point of being able to successfully manage this. And I worry then about—social disruption. I worry about—another leg down in the economies—causing—social disruptions. Because deleveraging—can be very painful, it depends how they're managed.
But when people—get at each other's throat, the rich and the poor and the left and the right and so on, and you have a basic breakdown,that becomes very threatening. And for example, Hitler came to power in 1933, which was the depth of the Great Depression because of the social tension between the factions. So I think it very much is dependent on how the people work this through together and worry about the social elements.
The fact that the Neo-Nazi party is on the rise on Greece does indicate that the connection between the rise of radical elements and depression remains a phenomenon, even in 2012.
In other, richer countries this doesn't seem to be a trend at all, but it's one reason to recognize that dealing with short-term economic crises (like unemployment) is also a good long-term move (if it keeps a functioning system of democracy in check).
And for a refresh on the connection between unemployment and the rise of the Nazis, here's a great chart from SocGen:
A conversation that came up on Twitter earlier reminded me about something I learned in Greece, but which I'd never written about before, and that was the reason that the Golden Dawn (the Neo-Nazi party) is so popular.
First of all, opinion polls do show them being quite popular. A new poll shows them being the 3rd most popular party in Greece, with 22% (!!) support.
Do more than a 5th of Greek people have Nazi or fascist tendencies? Heck no.
Basically, the Golden Dawn, as I learned when I was in Greece, operates as a kind of quasi services mafia.
Read more: http://www.businessinsider.com/popularity-of-golden-dawn-2012-9#ixzz27CJQuLjB
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Among all U.S. territories, the District of Columbia led with a coefficient of .534, followed closely by Puerto Rico at .531.
Among the lower 48? New York.
Most remarkable is that the U.S. continues to have an average rate — .475 compared to 2010's .469 — that rivals El Salvador's.
Here's the map (h/t NYT'S Catherine Rampell):
?maxX=618&maxY=461In the past 10 days the Congress-led government has announced a string of reforms to open up the retail, aviation and other sectors to more foreign investment and cut deficit-bloating subsidies, prompting protests and the exit of a key coalition ally.
"We have to restore the confidence of foreign investors," said Indian Premier Manmohan Singh, who turns 80 next week. "Money does not grow on trees and that is why we have made these decisions...
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... Trinamool chief Mamata Banerjee accused Singh of allowing in foreign supermarkets such as Walmart in "an undemocratic and unethical manner", which would swamp India's small, family-owned stores.
"The government is selling out the country," she said.
/... http://www.france24.com/en/20120922-indian-pm-wins-praise-straight-talk-reforms
Replacing this:
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With this?
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Greed and corruption at its worst
Traditional Indian street vendors and markets will be threatened by an influx of foreign supermarkets. Photograph: Rafiq Maqbool/AP
Certain habits in Indian life once gave an illusion of permanence. On hot afternoons 30 years ago, for example, you could lie on your bed under a slow-turning fan and hear noises from the street that had been the same for at least a century. The lonely wife in Satyajit Ray's film Charulata heard them in the film's celebrated opening sequence as she flitted about her Victorian mansion in 1870's Calcutta like a trapped butterfly, and in 1982 you could hear them still: some rhythmic chanting, the hollow patter of a little drum. And if, like Charulata, you went to the window and looked down, there in the dusty lane you would see a gang of coolies shouting something like a work-song as they pushed a wooden-wheeled cart with a heavy load, or a street entertainer drumming up business with his tabla. The most common sounds, however, were the singsong calls of peddlers selling fish or vegetables, or milky sweets and ancient biscuits from a portable glass case. Some salesmen rode bicycles; that transport apart, these were scenes that looked as if they had existed for centuries and would never be expunged by modernity.
Their extinction is coming – not immediately and not everywhere, but probably inexorably in the middle-class districts of the big Indian cities, now India's governing coalition has said it will open up the retail market to foreign supermarket chains. The coalition put the plan on hold last year after some of its smaller parties, notably West Bengal's Trinamool Congress, branded it as against the interests of "the common man". The postponement suggested a weak and muddled government. Economic growth was faltering, the prime minister, Manmohan Singh, looked particularly ineffectual, and the administration's reputation suffered the lash of critics at home and abroad (not least in the USA). Last week it decided to face down opponents and show its free-market muscles by reviving planned reforms that will allow familiar European and American names – Walmart, Tesco, Carrefour — to build stores in cities of more than a million people, providing the local state government agrees.
Western supermarkets arrived in China several years ago and there is now hardly a country in the world without them. India's resistance came out of what Louise Tillen, an academic at the India Institute in King's College London, describes as a "compound of opportunism and ideology" in a democracy that tolerates dissent and political fixes, but that resistance looks to have collapsed. The government says the marketing, technical and managerial expertise of the big supermarkets will transform food production and consumption by cutting out middlemen and building the system known as "the cold chain" that delivers fresh food swiftly from the field to the shelves. The farmer gets higher prices, the consumer pays lower ones and less food is wasted: the supermarkets hire staff in their thousands, no food rots in the warehouses.
Russian internet investor Yuri Milner had an ominous prediction for the retail industry and its many workers at a conference earlier this week in Ukraine.
He said that there will be “a pretty significant job loss in the retail sector to the tune of 40 million jobs in the next 20 years," according to Chrystia Freeland at Reuters.
What's going to cause that?
Milner estimates that right now, 6 percent of retail sales is done on the web, but that number will spike to 20 percent in the next decade. It will be 50 percent in two decades, he said.
Read more: http://www.businessinsider.com/yuri-milner-retail-jobs-disappear-2012-9#ixzz27CUJG4tT
9/21/12 'Lunch Atop A Skyscraper,' Famous New York City Photograph, Turns 80
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One of New York City's most famous photographs turned 80 Thursday. "Lunch Atop A Skyscraper," showing 11 workers eating lunch while sitting on a steel beam 800 feet above Rockefeller Center, was taken on September 20, 1932.
The image, taken at what is now the GE Building, struck a chord with Americans during the Great Depression. Ken Johnston, director of historical photography at Corbis Images-- the company who owns the photograph-- talked to The Wall Street Journal:
“This is the first two years of the Great Depression,” says Mr. Johnston. “Usually when you saw lines of men, at that time, they’d be in a bread line, at a soup kitchen,” not working and eating lunch, he says. Here, in the new and exciting age of skyscrapers, the photo displayed “the worker in America in the 30s, keeping going and building.”
Although Johnston confirms the photograph was likely a staged publicity stunt, he has no doubts the men weren't as fearless as they look. "Those guys are too strong of characters to be fakes," he told DNAinfo. "They do work up there. There's a great tradition of photographing construction workers up on the beams."
Much is still unknown about the photograph. Although Charles Ebbets is often credited as the photographer for the image, it's tough to verify. Additionally, the identities of nine of the men are still unknown. Two men were identified, according to The Journal, during research for "Men At Lunch," a documentary about the photograph which was recently screened at the Toronto Film Festival.
http://www.huffingtonpost.com/2012/09/21/lunch-atop-a-skyscraper-famous-new-york-photograph-turns-80-rockefeller-center_n_1904602.html?
Documentary trailer: Men at Lunch
appx 2.5 minutes
Spouse worked 30 years as a union Ironworker, climbing columns and walking those high beams, although in Dayton, Ohio, the buildings were not near as tall as those in New York. He followed in the footsteps of his father, and his grandfather and uncles.
(Henry Bourne/Bloomberg Markets) - John Fredriksen, 68, chief executive of Bermuda-based Frontline, is the most influential oil-tanker owner since the days when Greek tycoon Aristotle Onassis ruled the sea lanes.
The flow of much of the world’s oil is controlled from a small suite of offices perched over a Tiffany & Co. store in the Chelsea section of London. That’s where John Fredriksen, a Norwegian shipping magnate worth $13.2 billion, manages the world’s largest fleet of supertankers, the most valuable deep-water drilling company and an armada of about 128 vessels that carry minerals, grains and liquefied gases.
Every morning, he plows through a stack of reports on the operations of his maritime empire. Whenever he makes a bet-the-company move, which he does every few years, Fredriksen sets the data aside. “I still work on a gut feeling,” he says in a conference room adorned with a painting of a supertanker named Kathrine, after one of his two daughters.
As he navigates the worst shipping market since the 1970s, Fredriksen’s instincts are telling him to buy. He’s investing $7 billion in 18 rigs to pump oil from beneath the ocean floor and $4 billion in four dozen new vessels to transport liquefied natural gas, gasoline, propane and other fuels. Although Fredriksen loves tankers, he’s trying to increase his dominance over the global trade of liquid energy in most of its forms.
Fredriksen, 68, is making the biggest wager in a swashbuckling career that has brought billions of dollars in windfalls as well as bitter setbacks — such as the four months he spent in jail charged with fraud. A stout man with the weathered face of a mariner, Fredriksen is fond of joking that 42 of the 50 years he has worked in the tanker trade have been awful.
Olive oil farmers in Andalucia. The wholesale cost of the fruit is rising daily as the industry predicts a terrible harvest. Photograph: Peter Davis/Alamy
A fresh oil crisis is brewing. However, this time it won't be hitting the garage forecourts but the nation's kitchens.
The wholesale price of extra virgin olive oil has jumped 62% in three months after a severe drought in Spain, the world's largest producer, wiped out an estimated 600,000 tonnes of production.
Filippo Berio, the UK's biggest olive oil supplier, has warned that it will be forced to pass on the increase to consumers.
"The [wholesale] prices are going up rapidly daily," said Walter Zanre, managing director of Filippo Berio, which sells 10m litres of oil a year in Britain.
François Hollande said: 'I ask to be judged on results and these will take time' when asked about his poll ratings. Photograph: Philippe Wojazer/AP
François Hollande's popularity has plummeted just four months after he took office, according to the latest opinion poll.
The survey found only 43% of French voters were happy with the Socialist president. The drop of 11 percentage points is one of the worst for a leader in more than 50 years since the start of the fifth republic.
The poll by the Ifop organisation for the Journal du Dimanche found 56% of those asked said they were not happy with the president. The Ifop findings were backed up by two other opinion polls.
Asked about his disastrous ratings during a press conference with the German chancellor, Angela Merkel, on Saturday, Hollande replied: "I ask to be judged on results and these will take time.
