Apparently, Central Park is one of the richest bird-sighting locales in the US with more that 200 species.
6013. alistairconnor - 10/25/2005 3:19:12 AM
Wonk/Jay :
The fundamental question is, should businesses have morals? Do they have any other obligation than to deliver the best possible bottom line?
The conventional wisdom these days, seems to be that if management can improve profits by shedding employees, they are being disloyal to shareholders if they fail to do so. i.e. their duty is 100% to capital, 0% to the employees that constitute the enterprise, and still less to the outside world. Oh, and obey the legal framework, to the extent that you can't get around it.
The odd thing about this conventional wisdom, is that we all instinctively know it's a crock of shit. Is there any one here who would run a small business that way? I don't think anyone with moral integrity could.
6014. Magoseph - 10/25/2005 5:21:30 AM
Is there any one here who would run a small business that way?
Maybe or maybe not--family responsibilities often trump moral integrity, Ali.
Hello, Mac!
6015. wonkers2 - 10/25/2005 6:38:53 AM
Well, what got me started was Bob Herberts 0p-ed pointing out that while Chevron Oil portrays itself here in the U.S. as a highly environmentally friendly company by giving out annual environmentalist awards with much fanfare, it dumps barrels of contaminants in the Ecuadorian Amazon and refuses to clean it up, if it can, in fact, be cleaned up. If Chevron proclaimed that it was a bottom line for the shareholders, damn the environment and the workers company it might be easier to accept. Aside from the environmental depredation, it's the company's hypocrisy, it's efforts to have it both ways that's so galling. And to think that these are the companies that Bush is allowing to drill in the Anwar.
The U.S., if it wanted, is capable of forcing American companies to adhere to civilized environmental and employee standards of treatment and safety in their operations around the world, although there would clearly be messy enforcement issues. In Brazil American companies have created several of the most noxious environmental messes in the world, e.g. Cubatao, where the fish grow with two heads and the infant mortality and genetic malformation rate is (or was) astronomical.
6016. wonkers2 - 10/25/2005 6:41:31 AM
6017. jayackroyd - 10/25/2005 6:43:25 AM
The fundamental question is, should businesses have morals? Do they have any other obligation than to deliver the best possible bottom line?
The trouble is that the people who would enforce such morals are governments, and they have a history of selling out very cheaply. The US is now 16th in the world in broadband implementation largely because government was placed in charge of enforcing the morals of joint stock corporations. This is the worst combination of all. (This recent experience has been strong evidence that telephony should be nationalized, as in Europe. Currently, the telecom companies are in a concerted campaign to prevent localities from setting up community WiFi systems. By "prevent" I mean "make it illegal.")
The answer here is a free market answer. It's slower, but surer. Let there arise certifiers of good practice. Let them create labels. Let the governments not regulate business practices directly, but certify the label issuers. It worked for tuna.
Complicating this wrt labor practices is that the jobs you want to regulate are desirable before any regulation takes place. Liberals are quick to raise issues of cultural relativism in other contexts; I don't see why this one is exempt. An economist would protest that regulations would raise the wage rate at the expense of reducing the number of jobs. The reformer would retort that the money could come out of profits, but would have no way to make that happen.
6018. wonkers2 - 10/25/2005 6:45:02 AM
6019. wonkers2 - 10/25/2005 6:47:17 AM
6020. wonkers2 - 10/25/2005 6:53:24 AM
Enforonmental Hot Spots Around the World
6021. alistairconnor - 10/25/2005 7:05:50 AM
I was really just wailing, Jay, bemoaning the good-old-days when at least some businesses had decent values, without anyone enforcing them. There is a big stink in France at the moment about Hewlett-Packard : they are laying off a few thousand people in Europe, mostly France. Their French employees have the highest value-add per head, but apparently they can hire the same skills cheaper in Bulgaria or India or wherever.
There is nothing remarkable about this sort of corporate behaviour, except that HP didn't used to be like that. Certainly the issue resonates among IT people here, because it has, until recently, been well-thought-of.
The French instinct is to pass laws against this sort of antisocial corporate behaviour, but it's pretty futile. I agree that the best way to "moralize" business is consumer pressure.
6022. thoughtful - 10/25/2005 8:14:17 AM
wonks, i wasn't in agreement with your sentiment, free trader that I am, but I just loved the "unalloyed" adjective. Very good.
as to HP and france, yes french workers are high value added workers, but they are also incredibly expensive. (in fact the 2 are related.) HP is not supposed to be a charity but a money-making proposition. And if they can get the same quality of work for less elsewhere, then they have an obligation to their shareowners to do so. If the french don't like it, perhaps they could consider easing up on their 35 hr work week or their unemployment benefits which really amount to welfare to make themselves more competitive in the global market place.
Their choice. If they don't want to become more flexible, and choose to maintain their high rates of leisure, then they will necessarily have to deal with high unemployment rates and lost competitive position in the, as friedman calls it, flat world.
6023. wonkers2 - 10/25/2005 9:32:26 AM
Thoughtful, did you read Bob Herbert's column about Chevron's dumping oil in Ecuador? Doesn't that make you ashamed that an American company would do that. What about American companies maquiladors across the border in Mexico who pollute the air and water in ways they don't and couldn't in the U.S., fail in some instances to observe health and safety standards remotely related to those in the U.S. and allow their Mexican foremen "have their way with" young women maquiladora workers? Is it your position (Jay also)that this is okay behavior because they are serving the interests of their stockholders, or is it that you don't think the U.S. should try to do anything about it? Why is it worse for a U.S. company to bribe a foreign government official than it is to despoil the environment or abuse it's workers in foreign operations?
6024. judithathome - 10/25/2005 9:39:24 AM
What about American companies maquiladors across the border in Mexico who pollute the air and water in ways they don't and couldn't in the U.S.,
That crappy air works its way into the US anyhow...so in a way, they ARE doing it to the USA, too. And all for money for their shareholders.
6025. jayackroyd - 10/25/2005 9:41:26 AM
I was really just wailing, Jay, bemoaning the good-old-days when at least some businesses had decent values, without anyone enforcing them.--AC
HP is not supposed to be a charity but a money-making proposition. And if they can get the same quality of work for less elsewhere, then they have an obligation to their shareowners to do so.-T
I have two things that make be unhappy about all this. The first is that it didn't used to be this way, as Alistair says. IBM used to be a place you went for a career, not a stint. A guy at a F500 client who works in the benefits dept said, as the company was stripping the pension plan, that the whole idea of benefits, particularly pension, was employee retention. There's no longer any corporate interest in employee retention. This seems incredibly short-sighted to me. There was definite value to having a corporate culture that rewarded loyalty and subsuming the employee's short term interest to the corporation. As it is, it would be a mistake for an employee to take a nickel less or stay a day longer than is in his or her immediate interest. That seems like a formula for rapid fluctuation in the quality of the talent pool--with the quality diminishing just when it's most needed, at times of change and growth.
I'd buy whole shareholders' argument if Les Moonves were not making 52 million dollars. Executive compensation is at levels that cannot possibly be justified by their contribution to the bottom line or to shareholder value. The innovation of the last two decades has been the looting of companies' stakeholders (workers and shareholders both) by an interlocking collection of senior executives, who sit on each other's boards and vote compensation that is not in the shareholders' interest, and is absolutely not needed to hire the talent or experience.
6026. wonkers2 - 10/25/2005 9:52:03 AM
As I'm sure you aware, the E.U. requires countries seeking membership and the trade benefits that come with it to adopt to certain environmental, economic, political and labor rights standards. In theory, why would not it be reasonable to apply a similar but scaled down approach at the WTO on environmental and labor/human rights issues?
6027. alistairconnor - 10/25/2005 10:03:38 AM
Thoughtful, I knew I could rely on you for the conventional wisdom. I know that stuff.
What I find interesting, is that it's a fairly recent change in corporate culture on the part of HP. Do you agree that there was a time when certain corporations, even quite big ones, actually valued their employees (as opposed to claiming that they do, as everyone does), and that this time has passed, being replaced by the bottom-line conventional wisdom?
6028. thoughtful - 10/25/2005 10:14:47 AM
No I didn't read the herbert article, and i'm not surprised by the terrible things some cos do overseas. What I am always surprised about is why the local govts allow them to get away with it. Shouldn't the mexican govt have more concern for its workers and its environment than the US? shouldn't the ecuadorian govt have more concern for its environment and its people than the US does?
I have no problem with publishing such things and getting public sentiment to move corps to fix these things, but even at that, it's because not fixing them will damage the bottom line. I have no problem with employees unionizing to fix such things, because then not fixing it will damage the bottom line. Corps are motivated by bottom line issues. That's the nature of the beast. Move that lever and you'll get them to change.
But...was it a/c who raised the issue a year or more ago? ...the beast that is totally legal yet totally immoral is known as the corporation. And it's not clear to me that trade policy is the best way to accomplish this. If Ecuador enforces critical environment regulation then it will hamstring chevron as well as royal dutch shell. If however the US imposes it on US corps only, it becomes an unfair trade disadvantage...a disadvantage for a corporation that my be much more subject to public opinion than say some chinese SOE who might move in to ecuador in chevron's stead.
And I agree with jay that the ceo compensation is an enormous imbalance that needs to be fixed. Of course the crony capitalism that's rampant under this crowd is criminal for many reasons. I have no problem with the SEC and wish it was better funded. It's not clear to me that corps are any more amoral now than ever...only that in the past, they were more likely to be regulated and laws were made with the public interest in mind more than driven by the success of the lobbyists. Yesterday's op-ed in the times highlighted the benefits to the credit card cos of the new bankruptcy legislation whose net result will be impoverishing the middle class and the poor who have been hit with personal tragedies such as medical bills and divorce.
I think it's the legislative environment that has changed and needs to be fixed. Where's old TR when we need him???
6029. PelleNilsson - 10/25/2005 10:25:15 AM
I don't think it is so much a change in corporate culture as a change in the corporate environment. So HP is moving production to Bulgaria? 10-15 years ago that option was simply not available. And what is France's loss is Bulgaria's gain. It is not clear to me why the former should take precedence over the latter.
6030. wonkers2 - 10/25/2005 10:26:40 AM
Saying that the Mexican government and the Ecuadorian governments should have more concern for the enviroment and worker safety is akin to saying that the government of Afghanistan or Saudi Arabia should have more concern for women's rights. The U.S. can't change all the corrupt and undemocratic governments of the world. However, there are ways the U.S. could affect the behavior of U.S. corporations abroad, if it chose to do so, as it does in the case of the U.S. Foreigh Corrupt Practices Act and as the EC does by requiring civilized admissions standards.
The U.S. hasn't done so because the establishment people in both parties are very doctrinaire in their rejection introducing environmental or human rights considerations in trade negotiations. We got our toe wet with NAFTA which does contain rudimentary and ineffectual environmental and labor rights provisions.
6031. alistairconnor - 10/25/2005 10:26:56 AM
thoughtful, do you see the ironic contrast between your posts Message # 17199 and Message # 17205 ?
What I am always surprised about is why the local govts allow them to get away with it.
Yeah, why doesn't the Mexican government do like the French government, and demand decent conditions for their workers and the environment?
Yeah, why doesn't the French government do like the Mexican government, and lower their standards, if they want the investment and jobs?
6032. jayackroyd - 10/25/2005 10:33:49 AM
And what is France's loss is Bulgaria's gain. It is not clear to me why the former should take precedence over the latter.
Yes, I think that's a compelling argument, even more so when talking about American versus Mexican jobs. There's something I really dislike in American liberalism that is deeply concerned about poverty and opportunity in the US but doesn't give a rat's ass for children dying for lack of clean water in much of the world.
6033. thoughtful - 10/25/2005 10:34:09 AM
AC, I think there is a pendulum to everything in business which swings both ways...unionize/not unionize; centralize/decentralize; flat org structure/hierarchical org structure, etc.
In my own experience, I have seen the pendulum swing from "you need 30-year's experience to run this business" to "any manager can manage anything". The latter has led to the current vogue of 'disloyalty' toward employees...the HR philosophy that each person is supposed to be building a toolkit of talents and experiences and the only way to do that is to change jobs frequently, and we can fire you today, because we can always replace you tomorrow. I'm now seeing the pendulum swing back the other way...understanding that a person can't learn unless they've been in the job long enough for their mistakes to come back and haunt them...that a manager needs to know more than how to manage, but to have a deeper understanding of how the business operates in various economic/competitive environments and that each business has its own unique criteria and customer base that dictates what it must do to succeed.
I think the route is being laid out by some of the most successful cos including toyota which has a no-layoff policy.
Part of the problem is what a company does when it's faced with financial distress. The airlines, for example, deserve to be in bankruptcy as they seem to have an entire culture around making their customers feel abused and ripped off. (Key exceptions are SW and jet blue who are also, not surprisingly, making money.) Some firms will spiral down uncontrollably taking their employees and shareholders with them. Others will find a way to rebuild and recover, perhaps with a different culture. But if businesses don't respond to the environment in which they live, they will die. It's the nature of the beast.
6034. thoughtful - 10/25/2005 10:47:29 AM
Yes, A/C that is the point. If you choose to take your productivity gains in the form of a cleaner environment then it will necessarily affect your income. If you choose to subsidize unemployment then unemployment rates will be higher. If you choose 4 weeks vacation and mandatory holidays your incomes will be lower and you will be less competitive with countries that don't require the same.
Do you want me to wave a magic wand and make it not so?
Now granted these choices are not always mutually exclusive. For example, a safer work environment can raise worker productivity...a cleaner work environment can raise worker productivity. Certainly a worker working 100 hours a week is less productive than one working 40. But each economic choice has its consequences. And a company that ignores those advantages does so at its own and its shareholders expense.
And I agree with Pelle's point that one's loss is another's gain, except to the fact that one's loss is actually both's gain or at least it has been historically...by shedding less productive jobs to other countries that have a comparative advantage in those activities and re-employing the workers, both countries are better off as the size of the economic pie has grown resulting in richer customers. That has been the miracle of economic growth resulting from globalization.
6035. wonkers2 - 10/25/2005 10:54:53 AM
The WORLD loses when a company is allowed to pollute the environment or contribute to greenhouse warming. In the short run one country may gain and another lose, but in the long run everybody loses. Workers in both countries can lose when companies from developed industrial countries cut corners on human rights in other countries. The developed countries often lose jobs while the developing country gains unsafe jobs which don't pay a living wage. Not always, but too often the case. And sometimes, as in the case of some of WalMart's imports from China, the quality is abysmal.
6036. jayackroyd - 10/25/2005 11:02:14 AM
The developed countries often lose jobs while the developing country gains unsafe jobs which don't pay a living wage.
The predominant impression one forms of those "unsafe jobs which don't pay a living wage" is that they are prized by those who get them.
On pollution, the argument that carried the day in Kyoto for developing countries was that they didn't see why the US and Europe, but not they, got to go through a period of pouring filth into the air and the water in the process of accumulating enough wealth that they are willing to pay higher prices for goods that are not produced using such processes.
Fortunately for the greens, the evil Chinese (in terms of human rights) appear to have a sufficiently long time horizon that controlling pollution from coal utilization is already a priority.
On global warming, the article in today's NYTimes science section on the arctic ice going away in 50 years or so, includes an interesting throwaway comment directed at those who deride (still, unaccountably) the reliability of the forecasts of the global warming models. The scientist pointed that while it's true the models may be mistaken, they may be mistaken in either direction.
6037. alistairconnor - 10/25/2005 11:12:33 AM
I would be surprised if any of the current climate models integrate ALL of the positive feedback factors that have been identified recently :
* lessened reflectivity of shrinking arctic ice (probably the best-integrated)
* methane release from the thawing Siberian permafrost tundra
* melting crystalline methane on the ocean floor
... so one would expect them all to be on the conservative side, for the moment.
6038. jayackroyd - 10/25/2005 11:34:00 AM
No, you'd be shocked if they weren't on the conservative side. You don't get tenure predicting disasters that don't arise.
Ameliorating that is the media will root through any document stripping away caveats and crying "Doom Doom!!" But even with that, what I'm seeing is surprise from the researchers at how powerful the positive feedback effects are. (Not to shout "Doom Doom!!) but extinctions imply rapid environmental change are not that uncommon.)
6039. thoughtful - 10/25/2005 11:39:03 AM
wonks, The WORLD loses when a company is allowed to pollute the environment or contribute to greenhouse warming.
You do realize that 0 pollution is not an option, don't you? Even breathing generates greenhouse gases. So it's always a matter of economic choice...at what cost with what benefit, and who bears the cost.
when companies from developed industrial countries cut corners on human rights in other countries
I strongly suspect that if you look at what goes on in terms of human rights in the developing countries, international corporations are but a minor factor, their own govt's being responsible for far more human rights abuses. Do the sweatshop workers in China have more to fear from walmart or the chinese govt? Further, I suspect that in the longer run, the economic growth and income the development brings will necessarily give their people a greater voice in the operation of their govts which will help minimize human rights abuses. With the internet, can China control the flow of ideas as it did in the 70s? With rising GDP and a growing middle class and the entrance of global corporations, has China got a prayer at keeping the internet out? Tiannemen Square happened after the opening of china...could it have happened before?
6040. PelleNilsson - 10/25/2005 11:55:50 AM
We are really discussing three issues.
First moving production to countries with lower costs. I see nothing morally reprehensible about that. On the other hand; I have read about a couple of studies whichy indicate that in many cases much, even all, of the projected savings are eaten up by increased (mainly invisible) transaction costs.
Second, the exploitation of workers. This is a very difficult issue because the concept of "exploitation" is a nebuluous one. The gray area is very wide.
Third, we have pollution which I agree is a serious problem where the aggregation of all "local" effects will sonner or later have a global effect if nothing is done. But things are being done at least in China. (Maybe I read the same article as jay.)
But in the case of HP and Bulgaria, which alistair frets about, issues 2 and 3 don't come into play.
(Chirac proposed that EU should provide compensation in cases like this. That is the most ridiculous idea I ever heard.)
6041. wonkers2 - 10/25/2005 12:49:02 PM
Thoughtful: "You do realize that zero pollution is not an option?"
Of course I do. I obviously am not advocating zero pollution. And I'm not objecting to breathing. Get real!
I suggest you read Bob Herbert's op-ed and the ones I linked about Brazil's "valley of death" in Cubitao where conditions uninhabitable by man or beast were created by DuPont, Rhone Poulenc and Brazilian companies which made no effort to control the noxious pollutants from their petro-chemical plants. Then please tell me whether you are proud to see what international companies have done in Brazil.
"International companies are but a minor factor."
This may well be true in many countries and less true in others. Why shouldn't multinational companies be expected to bring their human technology along with their production technology rather than simply go along with local customs, e.g. like apartheid in South Africa. I'd be interested to know whether you supported trade sanctions imposed in this case? If so, we've established the principle and we're only arguing about the details. If not, you are a hard case, indeed.
Pelle: "The concept of exploitation of workers is nebulous."
True enough. However the EC has established some basic standards which they require of new members. Also the OECD industrialized countries many years ago developed Guidelines for Multinational Companies.
Exploitation of workers is nebulous. However, let's get specific--what about an auto parts company operating along the border in Mexico allows their Mexican foremen to sexually abuse the young girls who work in the plant because "that's a local custom" and "doesn't violate any Mexican law." Or an American auto company in Korea who, when there is a strike, calls the army and has the leaders and some of the workers thrown in jail. Or an American company in apartheid South Africa which has separate drinking fountains, bathrooms and wage scales for blacks and whites. I encountered all of these examples in my career with a major American company.
One of the oft-cited benefits of multinationals is the introduction of modern technology to developing countries. Well, as far as I'm concerned the pants and suspenders go with the coat--ie human resources and enviornmental policies as well as production technology.
Jay: "Unsafe jobs which don't pay a living wage are prized by those who get them."
Unfortunately this is true. They may have no choice. Nevertheless, that doesn't excuse failure by a company that knows better to introduce effective safety practices developed and observed in its home country plants. And whether many of the jobs created result in a positive social effect on the developing country is debatable. There are pluses and minuses. In Mexico for example, the maquiladoras clustered along the border drew workers from their small town and rural homes to sorry ghettos along the border. Some companies recognized that this was undesirable and began to put their plants in the interior far from the border. This resulted in far less social disruption.
6042. thoughtful - 10/25/2005 2:35:55 PM
Well, south africa was a special case in several ways.
First the sanctions were supported by a strong internal opposition to the govt. Without that it's unlikely that the sanctions would've worked. How effective have the trade sanctions on North Korea been?
Second, though run by a minority, it was still a democratic govt which made it more susceptible to political pressure.
Third, the sanctions excluded key exports like coal to europe and krugerrands. How strictly enforced the sanctions were, as with any such legislation is unclear. BushI himself refused to impose additional measures in 1989 as he said there was no evidence that the sanctions were working.
Fourth, it was dependent on the agreement of a large number of nations to work. This would have the same effect as if the country itself imposed a tariff in terms of equal impact on all corporations which is much different than imposing rules on US only corporations giving others an unfair trade advantage.
6043. wonkers2 - 10/25/2005 3:12:56 PM
Okay. I'm glad yoy don't exclude trade sanctions to achieve social, democratic or environmental objectives. Now all that remains is to devise practical and effective ways of applying them. Not an easy task I admit.
However, I'm reminded that, although I brought up Sout Africa which I agee was a somewhat special although not a unique case, my original point was for the U.S. to take a look, beyond the U.S. Foreign Corrupt Practices At, at ways to affect the environmental and human rights behavior of U.S. compnies abroad.
A recent example of a U.S. company playing ball with a foreign power in ways that don't meet it's own standards in the U.S. or other civilized countries is Yahoo's cooperation with the Chinese authorities to identify Chinese citizens who criticized the government on the Internet. With Yahoo's help several individuals have been identified and jailed, if my memory of recent articles serves me.[I'm not suggesting Yahoo should not have done this although the company has been criticized for its actions.]
Another point--the U.S. government under Democrats and Republicans has pursued copyright/intellectual property enforcement issues with China and other countries with great vigor in connection with trade talks, but, by and large has eschewed introducing environmental or worker rights issues in trade negotiations. They confine their efforts on environmental issues and worker rights to occasional bloviations designed for consumption by the populace at home.
6044. thoughtful - 10/25/2005 3:21:28 PM
I didn't give blanket approval to trade sanctions.
6045. wonkers2 - 10/25/2005 3:43:11 PM
I didn't say you did.
Our government says to U.S. companies "Don't bribe government officials of other countries. It reflects poorly on the United States."
IMHO, the time is here to say to them: "Don't pollute the environment in other countries. It reflects poorly on the U.S. and will eventually contaminate the earth for everyone."
And, "While you're at it, don't mistreat your overseas employees because it reflects poorly on the United States. It's your duty to bring civilized employment standards to developing countries along with capital investments in technology."
[BTW, I think most American companies try to do these things. They just need to try harder.]
6046. thoughtful - 10/25/2005 4:21:21 PM
Actually I think the incidence of us corps bribing overseas officials is very high as in many many places, that's the only way business gets done. They may not call it such, but it exists. And it puts those firms that don't do it at a disadvantage.
In the same way that if the us req'd us corps to not pollute in nations where's it's legal, it will put them at a disadvantage.
Not commenting on the 'rightness' of such things, but only its economic effects.
6047. wonkers2 - 10/25/2005 5:51:33 PM
I agree. There are ways of doing it without getting caught. Exxon does or used to do it in some countries by putting the best law firm in the country on a big retainer with the tacit understanding that they would grease whatever wheels needed greasing at high levels in the government. And of course they routinely paid small bribes to get visas and other documents issued. I once tried in a Latin American country for nearly an entire day to get a visa or some document that permitted me to have a summer job. I finally gave up and the company sent somebody over to get the document in 10 minutes. The company representative "took care" of the clerks on a regular basis.
However, what I meant to say was that my impression is that many or most American companies endeavor to implement reasonable plant safety standards and personnel policies for local employees.
6048. ScottLoar - 10/25/2005 8:55:31 PM
"Or an American auto company in Korea who, when there is a strike, calls the army and has the leaders and some of the workers thrown in jail."
Which American auto company? When was the army of the Republic of South Korea called in to quell a strike against a US company? Can you prove beyond rumour that any branch of the military of South Korea responds to an order from a US corporation? I understand that Korean labour unions are militant by even any modest definition of that word, that strikes often become pitched battles in the downtown streets, purposely disrupting the lives and livelihoods of Seoul urbanites; that the unions strike regardless of who owns the company, that Korean auto workers are not ill-paid and generally receive little or no sympathy from Koreans not of the labour unions. I do know that when GM bought four production plants from their venture partner in Korea it was obliged to keep even the least profitable open for at least five years even though the plant was not needed for GM's operations; hardly sounds like a people and government at the beck-and-call of US corporate interests.
"Another point--the U.S. government under Democrats and Republicans has pursued copyright/intellectual property enforcement issues with China and other countries with great vigor in connection with trade talks, but, by and large has eschewed introducing environmental or worker rights issues in trade negotiations. They confine their efforts on environmental issues and worker rights to occasional bloviations designed for consumption by the populace at home."
The People's Republic of China strongly (no, that's not the word, perhaps "ferociously") opposes any interference in its internal affairs (meaning anything that happens within its borders or that may affect events, persons or thoughts within its borders), and yet the US government continues to bring up matters of human and individual rights, continues to press individual cases, continues to argue in forums private and public for "rule of law", continues to ask for better cooperation in military matters so both sides can avoid future spy plane incidents, continues to... well, press the envelope with China. Worker's rights in China? It depends on who you are. Construction workers are commonly gyped and cheated, living in deplorable conditions on the worksite and wages held for up to a year or more by companies using those owed wages to extend their financial investment and minimize exposure (this has been reported numerous times on Chinese television), but Walmart's for example is unionized by order of the Chinese government, and surely not to protect workers who may be potentially abused by Walmart.
6049. wonkers2 - 10/25/2005 9:04:42 PM
Scott, the Korean army and/or the police put down many strikes in the 1980s and before. And many strikers were jailed. This is indisputable.
6050. wonkers2 - 10/25/2005 9:14:58 PM
South Korea-Labor Rights Violations Under Democratic Rule You can imagine the state of labor rights under the previous military dictatorship. My recollection is that a strike in the 1980s at Daewoo, which was an affiliate of General Motors, was quickly ended by the police/military and a number of strikers were jailed. This was routine.
6051. ScottLoar - 10/25/2005 9:27:08 PM
Yes, the Korean army and police put down many strikes by workers and students. Many strikers were jailed, some abused, some tortured to death. This is indisputable.
But again: "Which American auto company? When was the army of the Republic of South Korea called in to quell a strike against a US company? Can you prove beyond rumour that any branch of the military of South Korea responds to an order from a US corporation?"
Do you not understand that the companies created by Korean economic, tax and trade policies, receive favourable bank loans, and have a demonstrable collusion with government are the Korean "chaebol" and not US or any other of the foreign companies these very "chaebol" were created to compete with?
The chaebol, once the pride of a modern Korea, were revealed by the financial crisis of 1997 to be inefficient, unprofitable, grossly mismanaged, overgrown family enterprises sucking up government capital with little tangible benefit to the country. This has nothing (I repeat, nothing) to do with major US manufacturers and financial institutions who were purposely excluded from the market or their activities severely hindered by tariff barriers and restrictive local laws. Only when the chaebol were collapsing did most people appreciate their true nature yet successive Korean governments still cannot bring these chaebol fully to heel. They're a part of the culture, and they ain't American.
6052. ScottLoar - 10/25/2005 9:29:07 PM
When did Daewoo become an affiliate of GM? Yes, they are an affiliate but as of what date? What date did GM finally conclude percentage ownership of Daewoo?
6053. wonkers2 - 10/25/2005 9:31:34 PM
A union view of labor rights in GM plants in Korea Here
6054. ScottLoar - 10/25/2005 9:42:14 PM
Yes, "FIGHTING FOR BASIC UNION RIGHTS: DAEWOO WORKERS TAKE ON GENERAL MOTORS" surely is a union view, but introducing such a viewpoint disregards most of what I've written about Korean labour unions in #17230. You seek to establish guilt by association but avoid the very questions I've posed which will define the problem. Instead, you're pressing a point of view which shows no knowledge in any form of Korea.
6055. wonkers2 - 10/25/2005 9:47:35 PM
Which American company? A GM subsidiary or affiliate in South Korea in the 1980s which was managed by a GM manager who came from the U.S. I can't tell you the name of the individual who called the police or the army.
I also recall an auto industry strike in Brazil in 1979 where I was actually on the scene. After a couple of days, the top Brazilian manager, who as I recall was number two in the company, said "I'm going to call the Second Army." I remember saying in jest, "Why not call the First Army?" He replied vehemently "Because the First Army is in Rio! The Second Army is in Sao Paulo!" And he did call the Second Army and it came with tear gas and German shepherd dogs. But it failed to end the industry-wide strike by the Metalworkers Union. The strike ended a couple of weeks later when "Lula" instructed the workers to return to work. "Lula" is currently President of Brazil. At that time Brazil was just emerging from a military dictatorship.
6056. ScottLoar - 10/25/2005 9:48:26 PM
Addendum: Korean labour unions were fighting Daewoo well before it ever became part of GM. Have I failed to make that clear? If you did know that then why allude to the union broadsheet implying the Daewoo workers take on GM to preserve basic union rights?
6057. wonkers2 - 10/25/2005 9:53:16 PM
Scott, my original remark about the army (maybe the police) ending a strike at an affiliate of a U.S. auto company was accurate. I have never set foot in Korea and don't pretend to be an expert on labor relations in Korea. You are the one who disputed the accuracy of what I said and proceeded to obfuscate the issue. I believe it is accurate to say that Korea has been known for contentious labor-management relations and, in the past at least, for brutal intervention in labor disputes by government authorities. The situation may have improved, but I doubt that it's a paragon of labor rights. Korean managers of plants elsewhere in Asia are known to be among the most brutal in the treatment of their workers. Korea may well look good on human rights compared to China, but I suspect it has a long way to go in this department.
6058. ScottLoar - 10/25/2005 9:53:35 PM
Wonkers, neither the government of South Korea or any branch of the military would be at the beck-and-call of a foreign company. A GM manager (GM wasn't even in Korea then! The chaebol were being formed and protected and designed to not only dominate the local economy but compete on the world market and bring Korea from an underdeveloped to and fully developed and prosperous country a la the hated enemy Japan)calling contacts to get the unions busted? Pure Hollywood.
6059. wonkers2 - 10/25/2005 9:54:49 PM
What's your problem?
6060. wonkers2 - 10/25/2005 9:55:48 PM
From your attitude, I doubt you would recognize a labor right if it came up and bit you in the ass!
6061. wonkers2 - 10/25/2005 10:08:34 PM
Scott, you are full of shit. Please try to get your facts straight. I am looking at a GM International Directory dated 1987. It lists Daewoo Motor Company, Limited, Daewoo Automotive Components, Ldt, (Delco Remy), DHMS Industries, Ltd, (Harrison Radiator, Saginaw Steering Gear, Delco Moraine), GM Personnel Services, Inc. and Koram Plastics, Ltd, (Fisher-Guide).
What is your source of information on GM? Do you work for GM. I did for 34 years, the last 10 or so with international operations. Everything I have said is accurate to the best of my recollection.
6062. ScottLoar - 10/25/2005 10:08:42 PM
Just as I expected the argument now devolves to one of correct attitude.
6063. wonkers2 - 10/25/2005 10:10:05 PM
How about correct facts, then? Put your money where your mouth is.
6064. wonkers2 - 10/25/2005 10:14:18 PM
FYI, I was on the phone in Detroit with the GM manager at Daewoo, whose name I don't recall getting reports on the strike, to which I have referred. On what do you base your contradiction of what I have said?
6065. ScottLoar - 10/25/2005 10:14:44 PM
Wonkers, what was the percentage of ownership? Daewoo was a supplier to GM, but to leap and say GM owned or controlled Daewoo is a gross error. To further suggest from this that GM called in the army, navy or marines of the Republic of South Korea to break a strike is dishonest or dumb, you choose, and denies what I have laboriously tried to explain to you about recent Korean history. And I'm full of shit?
6066. ScottLoar - 10/25/2005 10:18:21 PM
Of course any responsible manager would be getting reports on any aspect of the business, most especially labour strikes in a foreign country known for its militant unions and clear anti-American bias. Why would I doubt that? Yet you suggest this reveals the sinister hand of that manager strike-busting.
6067. wonkers2 - 10/25/2005 10:20:06 PM
Yes, you are. I believe my reference to Daewoo as an affiliate of GM is accurate. I have no idea what GM's percentage of ownership in the affiliate or joint venture was. I couldn't even tell you the year in which the incident occurred other than that was in the 1980s. I repeat what is the source of your expertise on labor relations in Korea in the 1980s? I take it you have retracted your assertion that "GM wasn't even in Korea then."
6068. ScottLoar - 10/25/2005 10:23:30 PM
You worked for GM 34 years and so you have knowledge of their internal affairs? What exactly was your position? You were a GM manager? Somehow I don't think so, because if you worked in international operations GM's concerns about buying into Daewoo post-1997 and the militancy of the Korean labour unions would be well-known to you.
6069. ScottLoar - 10/25/2005 10:25:36 PM
GM in Korea in the 1980's as a manufacturing entity for the Korean market? GM bought components but was never a major company in Korea in the 1980s. A force that could call in the army, navy and marines? Yeah, I doubt that.
6070. wonkers2 - 10/25/2005 10:27:09 PM
During the 1970s and 1980s GM was getting intense criticism in the U.S. and around the world for labor practices in it's subsidiaries and affiliates in South Africa, Korea, Chile, Brazil and other countries around the world. In most cases the GM affiliates were just going along with the way things were done in the particular country, neither going out of its way to introduce better practices nor initiate the ones that didn't look good in in the industrialized world. In South Africa, after a lot of intervention from
Detroit, GM took the lead in eliminating the worst of apartheid from its plants.
6071. wonkers2 - 10/25/2005 10:30:24 PM
You haven't been reading my posts nor have you answered my questions. I certainly am and was aware of the militancy of unions in Korea. Korea tried unsuccessfully to introduce Japanese style labor relations after the military dictatorship ended in the early (?) 1980s.
6072. ScottLoar - 10/25/2005 10:31:51 PM
"I repeat what is the source of your expertise on labor relations in Korea in the 1980s?"
Wonkers, one of my university majors was East Asian Studies with a history emphasis. I've travelled to South Korea about twice a year every year or so since 1980 excepting a brief hiatus 1983-87. I do business in Korea through an exclusive distributor and a country-wide dealer network. I read the Far East Economic Review faithfully until its demise early this year. I read the local English language newspapers. I talk, I ask, I pay attention to not only that which immediately affects my business but also local matters that interest me, such as the discussion I thought I was having with you. In every instance my purpose is to see things clearly.
6073. ScottLoar - 10/25/2005 10:41:50 PM
In my correspondence with Wonkers I now publicly retract these six words, "GM wasn't even in Korea then!"
6074. wonkers2 - 10/25/2005 10:44:49 PM
Well, you were talking as if you work or had worked for GM. I repeat, everything I have said above is accurate to the best of my recollection. The individual who called the police and/or the army on the strikers probably was not the GM manager who probably didn't speak Korean and had no idea whom to call. Possibly the gendarmes came on their own accord. It's possible that they would have come even if GM had asked them not to. The point is that during that period strike-breaking by the police or army was routine in Korean and multinational companies and many union leaders were jailed often for doing no more than a union leader in the U.S. or Europe do as a matter of right.
6075. wonkers2 - 10/25/2005 10:46:11 PM
Thanks for the partial retraction.
6076. ScottLoar - 10/25/2005 10:54:22 PM
"The point is that during that period strike-breaking by the police or army was routine in Korean and multinational companies and many union leaders were jailed often for doing no more than a union leader in the U.S. or Europe do as a matter of right."
Again, I have never disputed this point, not is this the nexus of our disagreement. GM or any other foreign company is not responsible for the militancy of Korean labour unions, a home-grown variety which roots can be traced to Yi Dynasty factionalism; the government and military of ROK are not at the beck-and-call of foreign companies; labour unions are not generally well-regarded by Koreans no in the unions (which means most Koreans); Korean labour unions have a history of militancy before and independent of foreign firms; and - this is my opinion - the militancy of Korean labour unions is a national detriment.
6077. ScottLoar - 10/25/2005 10:57:37 PM
"Thanks for the partial retraction."
In good conscience what more do I have to retract?
6078. wonkers2 - 10/25/2005 11:02:12 PM
Of course GM is not responsible for the militancy of Korean unions. I said nothing to suggest that it was. My guess the militancy is related to their treatment by the military dictatorship and subsequent governments, whose record on human rights has been less than impeccable, as well as to other historical factors. The manager of a multinational company must cope as best he can with the reality he finds in the particular country. However, many could do more to introduce more humane and environmentally friendly policies.
6079. wonkers2 - 10/25/2005 11:03:44 PM
The implementation of labor rights even in the U.S. is far from what it should be.
6080. wonkers2 - 10/25/2005 11:04:30 PM
But we have a worker's paradise compared to China and Korea.
6081. wonkers2 - 10/27/2005 7:05:27 PM
Science v. Evolution in Kansas Here.
6082. jexster - 10/28/2005 10:43:05 AM
HEADLINE: MIDDLE EAST POLICY COUNCIL 41ST CAPITOL HILL CONFERENCE SERIES ON U.S. MIDDLE EAST POLICY
SUBJECT: "A SHI'A CRESCENT: WHAT FALLOUT FOR THE U.S.?
SPEAKERS: JUAN COLE, PROFESSOR, HISTORY, UNIVERSITY OF MICHIGAN; KENNETH KATZMAN, SPECIALIST IN MIDDLE EAST AFFAIRS, CONGRESSIONAL RESEARCH SERVICE; KARIM SADJADPOUR, ANALYST, INTERNATIONAL CRISIS GROUP; RAY TAKEYH, SENIOR FELLOW, MIDDLE EASTERN STUDIES, COUNCIL ON FOREIGN RELATIONS
MODERATOR/DISCUSSANT: CHAS. W. FREEMAN, JR., PRESIDENT, MIDDLE EAST POLICY COUNCIL
LOCATION: THE CAPITOL, WASHINGTON, D.C.
BODY:
MR. FREEMAN: Okay, I think we should call this to order, and I will provide the usual introduction, following which we will have some serious discussion. I'm Chas. Freeman. It's my honor and sometimes pleasure to be president of the Middle East Policy Council, a small, struggling organization in Washington, which for 25 years has tried to perform a gadfly role. We come up here in the "heart of darkness" on Capitol Hill and we raise politically incorrect questions for public debate. We don't take positions; we just ask questions, and we have a pretty good batting average, I would say, of being well ahead of the curve in identifying issues that later become matters of wider concern.
In addition to these sessions we publish a quarterly, Middle East Policy. The first item in this is always the edited transcript of the last session. The last session was on the three insurgencies and four civil wars currently underway in Iraq under our supervision, and I encourage you, if you don't get this, to do so.
Finally, outside, beyond the Beltway, out there in the real world -- which as we all know doesn't count -- we perform a useful service of training high school teachers about how to teach about Arab civilization and Islam. We've trained some 18,000 teachers. We thus reach about 1.4 million high school kids a year and confuse them with a fact or two that they otherwise would never have encountered in the course of our splendid public educational system.
So these are the three things we do. To do them we require money. We never have any, so we have -- we're in the middle of a drive to gain an endowment, and I'm very pleased to report, for those of you who are interested, that we have made a bit of progress this year, most recently in the form of a generous pledge of ongoing support over the next five years from Alwaleed bin Talal. His Royal Highness, it turns out, is a subscriber, one of the few people who actually pay to get this -- (laughter) -- and we're very appreciative of his willingness to keep us from going under, which we may do at any time, but have not done yet.
This brings me to this morning's events. For those of you who are familiar with the format of these discussions, they're always the same. We have four panelists representing different perspectives on the issue of discussion. Each gets about 10 to 12 minutes to make a presentation. When they exceed 10 to 12 minutes, I get up, and if they go over 12 I physically eject them from the podium, or in this case rip the microphone off the wire. But I hope that won't be necessary today.
The session then turns to comments and questions. I would encourage you to simply raise your hand or otherwise give me a signal if you want to make a comment or a question. I'll note you down, you know, handsome man, third from the left -- beautiful woman, whatever. Well, I won't describe my note-taking secrets -- (laughter) -- but I will call you and would you come to the microphone please, identify yourself, and be as succinct as you can in making whatever comment or question you wish to do. I think usually this part of the program is the most interesting, and I always look forward to it.
The situation in Iraq, which we're discussing today, has become serious enough so that something absolutely unprecedented happened a couple of weeks ago, namely the Saudi foreign minister issued a public statement. Saudi press releases are oxymorons, or they are as rare as unicorns in the woods, to be found only by virgins in the light of the full moon. (Laughter.) But Saud al-Faisal expressed his concern on two scores, one of which is of much wider concern than simply to Saudi Arabia, and that is that Iraq and the instability in Iraq and the multiple civil wars in Iraq may in fact be coming to resemble the 30- years' war in Central Europe, a struggle within Islam with the possibility of igniting a wider struggle throughout the fifth of the human race that adheres to the Muslim faith. Or, to put it a different way, that this may turn out to be, if it is not managed correctly, a 21st century version of the Spanish Civil War in which Spaniards, for their own reasons, began to kill each other. They drew in the support of others, and a proxy war and rehearsal for a wider conflict in that case to define civilization within Christendom began -- in this case, possibly Islam.
But the Saudis clearly also, despite their own fond relationship with Tehran, are also concerned about a second issue, which is the possibility of Iranian domination of a weak and divided Shi'a- dominated Iraq. In a recent visit to the region, in fact, I found a dominant concern in the Gulf countries to be the possibility that the United States, by intervening as we did in Iraq, may inadvertently be creating a Shi'a crescent in the northern tier of the Arab world, which offers Iran unique opportunities that it has not had for many years, to exercise a dominant role, and to exercise that role in ways that may be destabilizing to others.
What do the trends toward what the liberation of the Shi'a in Iraq -- after all, they are the majority -- what does this mean for Iraq? What does it mean for countries like Bahrain, which have Sunni rulers but Shi'a majority population, or for regions of other countries like Saudi Arabia Al Hasa, which is predominantly Shi'a, or for Kuwait for that matter, which has its own substantial Shi'a minority? What does it mean for the United States, for the region, for Israel, for our friends the Turks and others?
And I think we've assembled really a splendid panel today to talk about this, and they're going to go -- by some accident of fate they will actually go in the order that was on the program. This happens once in a while through divine intervention. So the first speaker will be Juan Cole, who, to anybody who is on the Internet needs no introduction because he runs what is by far the most informative blog on the issues of the day. He has also got a cell phone that he hasn't turned off. (Laughter.) He also is a renowned professor and author, and his biography, like the biography of all the speakers and panelists, appears on the back of the program so I'm not going to recapitulate it.
Ken Katzman is one of the national treasures who hides out in the Congressional Research Service, a real expert on Iran and on Shi'a matters. And Juan will talk about internal Iraqi Shi'a matters; Ken will take that to a broader stage involving Iran as well as Iraq.
Karim Sadjadpour, again, very well known, now with the International Crisis Group.
He has written very widely on Iranian society and politics, and he's going to talk about the Iranian perspective on these events as he appreciates it.
And finally, Ray Takeyh, who is no stranger to the Middle East Policy Council -- we actually arranged his marriage in good Middle Eastern fashion -- (laughter) -- through the council. He is now at the Council on Foreign Relations where he is in charge of the Middle East, and therefore ultimately accountable for everything that's happening there. (Laughter.) And Ray is going to talk about U.S. policy, particularly toward Iran but toward the region in light of these developments.
Speakers may stand up, sit down, whatever you wish. And I think the cameraman prefers you to sit, so -- but you don't have to listen to him if you don't want to.
Juan, would you like to lead off?
6083. wonkers2 - 10/29/2005 10:15:47 AM
With a longer life expectancy, expect a longer working life Here.
6084. wonkers2 - 10/30/2005 12:19:39 PM
Another featured, front page article on the private corporation and public employee pension debacle. A long, informative article in this week's Sunday NYT Magazine by Roger Lowenstein. Here.
6085. alistairconnor - 11/14/2005 8:02:14 AM
Further to the "peak oil" thing :
The world's second-largest field is past its peak
The peak output of the Burgan oil field will now be around 1.7 million barrels per day, and not the two million barrels per day forecast for the rest of the field's 30 to 40 years of life, Chairman Farouk Al Zanki told Bloomberg.
What's interesting about it, is not that there is some sort of sudden or dramatic downturn, but that the Kuwaitis have had to revise their production forecasts downwards.
This lends credence to the thesis that the industry forecasts for oil production are in large part a matter of smoke and mirrors, and increases the likelihood that the peak is indeed upon us, and not thirty years off as some still claim to believe.
The sententious closing paragraphs of the article made me do a double-take : is this some sort of greenie website? No, it's a mainstream business site, "Arabian business services"... what's the world coming to?
All this was foreshadowed in the energy crisis of the late 1970s when a serious inflection in oil supply by the year 2000 was clearly forecast. How ironic that those earlier forecasts now look correct, while more modern and recent forecasts begin to look over optimistic and out-of-date with geological reality.
Nobody can change the geology, and forces of nature that laid down reserves of oil and gas over millions and millions of years. Could it be that we have been blinded by technological advances into thinking that there is some way to beat nature?
The natural world has an uncanny ability to hit back at the arrogance of man, and perhaps a reassessment of reality at this point is called for, rather than a reliance on oil statistics that may owe more to political maneuvering than geological facts.
6086. jayackroyd - 11/14/2005 8:43:37 AM
In a remarkably timely fashion, a report from a peak oil conference.
6087. wonkers2 - 11/19/2005 11:45:51 AM
Too good to be true? Here.
6088. PelleNilsson - 11/30/2005 1:12:14 PM
jay -- This book, mentioned in SciAm, caught my attention
Apparently, Central Park is one of the richest bird-sighting locales in the US with more that 200 species.
6089. PelleNilsson - 12/2/2005 1:14:59 PM
A while ago we discussed transliteration of languages with non-latin scripts. Here is a challenge for you: six transliterations of the name of a well-known Russian uthor according to six standards. Your task is to connect the two.
1. Anton Pavlovic( c(ecov
2. Anton Pavlovitj Tjechov
3. Anton Pavlovich Chekov
4. Anton Pawlowitsch Tschecow
5. Anton Pavlowitch Tchekov
6. Anton Pavlowicz Czekow
********************************
A. French
B. Swedish
C. Polish
D. English
E. German
F. "Scientific"
Note: "Scientific" is a system that is being introduced - slowly - by reasearch libraries. The several national transliteration systems are hell on library search engines in a globalized world.
6090. jayackroyd - 12/2/2005 1:28:45 PM
Central park is a stopping point for many birds during the spring and fall migrations. Birders mark their calendars as species arrive.
1 F
2 B(guessing here)
3 D
4 E
5 A
6 C (Spelled just like it sounds)
6091. alistairConnor - 12/2/2005 3:31:07 PM
1 c(ecov F. "Scientific"
2 Tjechov B. Swedish
3 Chekov D. English
4 Tschecow E. German
5 Tchekov A. French
6 Czekow C. Polish
I arrived, independantly I swear, at the same answers as Jay... I'm quite sure of the French English and German, and the others I can get by elimination.
Good game.
6092. jayackroyd - 12/2/2005 3:42:04 PM
I was certain of Polish and English, and pretty sure of the German. Your confirming the French makes me think this is the correct list. I supposed the scientific transliteration tries to assign one symbol to each phoneme, and that left 2 to be swedish.
6093. wonkers2 - 12/2/2005 3:49:08 PM
One problem with transliteration to English is that English spelling is irregular and barely related to the way the words are commonly pronounced. In my opinion, one goal of a good transliteration is lead the speaker to pronounce the word as closely as possible to the way a native speaker would pronounce the word in the original language.
6094. thoughtful - 12/2/2005 4:02:27 PM
No, I think the first is polish only because the accent mark is similar to those I've seen in czech and polish writing. Clearly 3 is english. I've never even heard of scientific. I would guess 4 is german as it has all the w's for v's like wagner. And I'm guessing the Tj in #2 is swedish.
So that would make it
Polish
Swedish
English
German
French
Scientific
But most likely i'm wrong.
Irv would have this in a flash.
6095. wonkers2 - 12/2/2005 5:13:12 PM
Highly recommended for do-it-yourself investors: David F. Swenson's "Unconventional Success--A Fundamental Approach to Personal Investment." The book is an eye-opener, even for knowledgeable investors, on the conflicts, abuses, questionable and illegal practices, excessive management fees, distribution charges, hidden payments to brokerage houses of most American for-profit mutual fund companies. About the only mutual fund companies given a clean bill of health are Vanguard and TIAA-Cref.
He recommends portfolio diversification among six core asset classes with a maximum of 30 percent in any one of the classes--1. Domestic equity, 2.Foreign Developed Equity, 3. Emerging Market Equity, 4. Real Estate, 5. U.S. Treasury Bonds, 6. U.S. Treasury Inflation-protected Bonds.
His chapter entitled "Obvious Sources of Mutual-Fund Failure" is a real eye-opener. Swenson doesn't shrink from naming names and providing specifics on inherent conflicts and abuses.
Swenson manages Yale's $14 billion endowment and teaches finance at the Yale School of Management. His book is the single most useful book on personal investing I've ever read.
6096. Marc-Albert - 12/2/2005 7:55:31 PM
My Petit Robert spells it Anton Pavlovitch Tchekhov. I suspect 50 years ago it would bave been Tchékov.
6097. Marc-Albert - 12/2/2005 8:03:14 PM
Spare the word...
An applicant must meet and/or shall agree to or comply with the following conditions:
French translation:
Le demandeur doit:
6098. PelleNilsson - 12/3/2005 3:32:45 AM
jay and alistair got it right. Well done.
6099. jayackroyd - 12/3/2005 9:16:03 AM
One problem with transliteration to English is that English spelling is irregular and barely related to the way the words are commonly pronounced.
Spelling Bees are, as far as I know, uniquely held in English. In Polish, for example, the idea is absurd.
In my opinion, one goal of a good transliteration is lead the speaker to pronounce the word as closely as possible to the way a native speaker would pronounce the word in the original language.
Yeah. The trouble is there is a conflicting goal of using the same rules all the time. Your transliteration of the word used for the terrorist group that may or may not still be operational might well be the best, but using the same rules on other words might not work as well.
6100. wonkers2 - 12/3/2005 10:33:22 AM
True enough.
The same goes for Spanish for which there has never been a spelling bee because, with a couple of exceptions, the words are spelled exactly the way they are pronounced. Of course, problems arise when words from English or other non-Hispanic languages invade the language. This is one of the sources of spelling problems in English.
Also, there is a problem in American English on whether to pronounce the word as most people do in an Americanized fashion or the way it is pronounced in the original language (and risk being considered an effete language snob). This is especially true of many words in Spanish and French. For example, some place names in California are pronounced "correctly" in Spanish while others have been "butchered" into anglicized pronunciations with no apparent rule or pattern other than how the majority has come, over time, to pronounce the words. I guess the majority is the final arbiter in such matters.
6101. PelleNilsson - 12/3/2005 10:39:44 AM
Do you speak Polish, jay?
6102. wonkers2 - 12/3/2005 10:56:40 AM
Here's one from yesterday's Wall Street Journal for you mutual fund or hedge fund investors:
Millenium Settles in 'Timing' Case; Funds, Executives to Pay $180 Million
Hedge funds run by New York money manager Millenium Management LLC and four of the firm's top executives agreed to pay $180 million to settle regulatory charges that they tricked mutual-fund firms into allowing them to make trades that cheated other investors.
The executives, including Millenium founder Israel Englander, used more than 100 "shell companies" to open more than 1,000 brokerage accounts and make more than 76,000 rapid trades in mutual funds from 1999 to 2003...Rapid trades in and out of funds--known as market timing--are barred by most fund firms because they raise expenses and lower returns for long-term investors....
Since Mr. Spitzer shook up the sleepy mutual fund world with allegations of improper trading in Sept. 2003 15 firms have reached settlements totaling more than $3.5 BILLION, panalties and fee cuts for investors. Millenium is the second hedge fund to settle. Canary Capital Partners was the first; it paid $40 million....Millenium and the individuals settled without admitting or denying wrongdoing.
New York authorities say the mutual-fund trades totaled more than $52 BILLION in addition they say Millenium traded more than $19 BILLION improperly through fund-like accounts held in insurance products such as variable annuities...Millenium also received same-day pricing for some trades made after the market closed in an illegal practice known as "late-trading."....
Yale professor and endowment manager David Swenson's book details these and other shady practices by many of the biggest names in the mutual fund industry.
6103. alistairConnor - 12/3/2005 11:16:31 AM
Spelling is not trivial in French : unlike English, there is no ambiguity about how to pronounce any written word, but there are generally many phonetically valid transcriptions of a spoken word, and homophones are common.
Dictation is something of a national sport. Bernard Pivot, who hosted literary shows on TV for decades, used to do an annual one on the radio, tens of thousands participated. Extremely difficult. He did his last one this year.
6104. Marc-Albert - 12/3/2005 11:38:42 AM
Indeed, spelling is not trivial in French.
All of Pivot's dictées on CD
Spelling bees uniquely held in English???
Hey anglocentrists! What about French dictées? Arguably the most popular spelling bees in the world.
French TV personality Bernard Pivot's annual spelling bees have been broadcasted live in France, Belgium, Switzerland, Québec/Canada, and now Lebanon (2002) and Morocco (2005) since 1985.
Lebanese finalists who took part in Pivot's live dictée in 2003 
Pivot broadcasting his dictée to the world from the Muséee des Civilization in Ottawa in 2004.
6105. Marc-Albert - 12/3/2005 11:48:02 AM
from the Muséee des Civilization in Ottawa in 2004.
I ain't going to be a finalist for sure. It should spell Musée des civilisations :)
6106. jayackroyd - 12/3/2005 12:10:22 PM
Thanks for straightening me out on that. I also should have thought of Portugese, which doesn't sound anything like it looks.
Pelle--I know about 8 Polish words. My wife's family is of Polish extraction; her mother is reasonably fluent, and our Christmas tradition is Polish.
6107. PelleNilsson - 12/3/2005 12:10:41 PM
Swedish spelling is no child's play either.
sk
skj
stj
sch
sj
ssj
sh
All these combinations represent exactly the same sound, a soft 'sh' which few foreign-born learn to master.
You would think, perhaps, that the rational Swedes should do something about this, but we won't, and for good reasons.
6108. jayackroyd - 12/3/2005 12:17:02 PM
which we won't give.
6109. PelleNilsson - 12/3/2005 1:53:03 PM
I thought the clever Moties would be able to work it out. The reasons are universal, not specifically Swedish.
6110. PelleNilsson - 12/8/2005 4:28:34 AM
I forgot about the above. The main reason we won't reform our spelling system is that it would make all earlier texts inaccessible within a generation or two.
6111. alistairconnor - 12/8/2005 9:25:28 AM
Franco imposed a phonetic reform of Spanish spelling, I understand. Three quarters of the population was illiterate at the time, so it seemed a cost-effective approach with respect to the education effort.
6112. Linnea - 12/9/2005 12:43:46 PM
I thought another reason for keeping old spellings is that they tell you something about the derivation and history of a word.
Finnish is very phonetically spelled because hardly anything was written down in Finnish before the mid-19th century. The spoken language hasn't had time to diverge from the written.
6113. PelleNilsson - 12/9/2005 12:57:23 PM
That's true, Linnea. There is always a reason for seemingly odd spellings.
6114. PelleNilsson - 12/14/2005 11:48:54 AM
From the IHT December 13, 1905:
New York Evidences of an American revolt against the archaic method of determining weights and measures is manifest everywhere, now that the day of the metric system is so near at hand. Among the progressive institutions in New York is the College of Pharmacy, of Columbia University, which teaches its students only in equivalents based on the metre. One of the most vigorous attacks which have been made upon the faults of the common school system of New York comes from Professor Virgil Coblentz, of that institution, who occupies the chair of the practice of pharmacy. "It is a downright shame," said Professor Coblentz, "that a civilized nation, such as the United States, should be committed to this apology for a system of weights and measures."
Does anyone know the significance of "now that the day of the metric system is so near at hand"?
6115. wonkers2 - 12/18/2005 10:20:01 AM
A breath of fresh air: The boss says "Pay me less." Ethan Berman.
6116. wonkers2 - 12/18/2005 10:24:30 AM
A more typical approach: The boss who says "Pay me more!!" Delphi's Steve Miller and KMart's Eddy Lampert say "Cut wages, cancel the pension plan and health care, screw the stockholders, and PAY US MORE!" Whatever.
6117. thoughtful - 1/4/2006 11:07:37 AM
Time to quit the forecast game.
Recent review of "Expert Political Judgment: How Good Is It? How Can We Know?" in the NYer makes key points on forecasts and forecasters.
Experts are worse forecasters than nonexperts
Experts like anyone else fall in love with their own forecasts and then selectively choose the data that continues to support their case and ignore the contrary data.
Experts are expert at making excuses about why they were wrong...wrong for the right reasons, or blindsided by an unlikely event, or mostly right, etc. Experts are also expert at misremembering or not holding themselves tightly to past predictions...nor do they generally have others holding them tightly to their past predictions.
Experts who make it need to make it by being different from the pack. No one bothers to listen to someone saying what we already know as we already know it. So to be interesting, they need to be off trend and out of the main stream which lowers their odds of being right.
Experts also need to sound like they know what they're talking about so they bring in more detail and weave together more events into a plausible scenario. Makes them more believable. But it also makes it more likely they're wrong as the more low probability events required to yield the outcome, the lower the probability of that outcome becomes....by a lot.
So in his (Philip Tetlock) results, a nonexpert who was reasonably current and well informed on the topic, say by reading papers and news mags can guess as well and often better than the experts.
So there you go...to succeed at forecasting, a lot of knowledge is a dangerous thing.
6118. jexster - 1/11/2006 8:46:45 PM
Gaussian distributions anyone?
30,000? No. 100,000? No.
How Many Iraqis Have Died Since the US Invasion in 2003?
President Bush's off-hand summation last month of the number of Iraqis who have so far died as a result of our invasion and occupation as "30,000, more or less" was quite certainly an under-estimate. The true number is probably hitting around 180,000 by now, with a possibility, as we shall see, that it has reached as high as half a million.
6119. wonkers2 - 1/15/2006 11:24:24 PM
There are several interesting articles in the Sunday NYT Magazine today, 1-15.
One is about the growing trend toward passage of minimum wage laws by cities and states, most notably Santa Fe where the minimum wage is now $9.50/hour compared to the federal minimum of $5.15. Recent economic studies support the conclusion that reasonable increases in the minimum wage do not adversely affect employment. These increases are receiving increasing public support.
Another is by a gay Yale law school professor is about civil rights law which currently does little to protect the rights of gays, blacks and other minorities who are unwilling to "cover," i.e., conform to white majority norms and are fired as a result. For example, the courts rejected a discrimination suit filed by a black American Airlines flight attendant who was fired because she refused to stop wearing her hair in corn rows. The judge took note of Bo Derek's corn rows in the movie "10" and concluded that the flight attendant, therefore, had not been guilty of racial discrimination. Inveresting article.
6120. PelleNilsson - 1/16/2006 10:05:11 AM
The cover of this week's Economist:
6121. wonkers2 - 1/19/2006 2:09:34 PM
Slate's doctrinaire libertarian economist Steven Landsburg is still at it. This time miss-applying cost benefit analysis to justify a medical decision to prematurely pull the plug on a woman on a respirator (she wanted to stay on until her mother could reach her bedside). Cornell economics professor Robert Frank takes Landsburg apart in today's NYT. Here.
6122. wonkers2 - 1/26/2006 10:27:04 AM
Behavioral economics--a bird in the hand or two in the bush? Here.
6123. wonkers2 - 2/12/2006 11:53:30 AM
For some "words of wisdom" from w2 on the parlous state of the U.S. auto companies check AutoSpies.com. Here.
6124. wonkers2 - 2/12/2006 7:31:49 PM
6125. PelleNilsson - 2/23/2006 2:50:01 PM
U.S. archives making public data secret again
Snippets:
In a seven-year-old secret program at the National Archives, intelligence agencies have removed from public access thousands of historical documents that had been available for years, including some already published by the State Department and others photocopied years ago by private historians.
But because the reclassification program is itself shrouded in secrecy - governed by a still-classified memorandum that prohibits the National Archives even from saying which agencies are involved - it continued virtually without outside notice until December. That was when an intelligence historian, Matthew Aid, noticed that dozens of documents he had copied years ago had been withdrawn from the archives' open shelves.
[Some reclassifications] seem guided by an old bureaucratic reflex: to cover up embarrassments, even if they occurred a half-century ago.
One reclassified document in Aid's files, for instance, gives the CIA's assessment on Oct. 12, 1950, that Chinese intervention in the Korean War was "not probable in 1950." Just two weeks later, on Oct. 27, about 300,000 Chinese troops crossed into Korea.
6126. alistairconnor - 2/23/2006 6:38:16 PM
I just installed the BBC Climate Change screen saver, billed as the biggest climate experiment ever undertaken. You sign up to let them use your spare processing power, running a climate simulation. It will take about 3 months to complete one run of the simulation on my little computer. There are nearly 100 000 people signed up. They will screen a TV program about it in May...
6127. arkymalarky - 2/23/2006 7:23:11 PM
If I weren't on dialup....
WRT the reclassification, the administration has been doing some creative things with data for a while. Several years ago, the AERA, an education research group, released a statement about it. When another group was looking for data on charter schools, they found it was buried in piles of data on schools in such a way that it took them a lot of hours of work to dig them out--to find that charter schools had not performed very well compared to other public schools, despite claims to the contrary.
6128. PelleNilsson - 2/26/2006 3:40:30 PM
The Swedish prime minister has proclaimed that we will "break the dependence on oil by 2020". That will not happen, of course. The lead times in the energy sector are longer than that. But as this diagram (new window) of Sweden's consumption of oil products 1946-2004 shows a lot can be done in a rather short time.
Here is a translation of the legend from left to right.
Gasoline
Diesel
Jet fuel
Light fuel oil
Heavy fuel oil
6129. wonkers2 - 2/26/2006 3:53:13 PM
What is the price of a gallon of gasoline in Sweden and what part of that price is tax?
6130. PelleNilsson - 2/27/2006 11:29:28 AM
10.90/7.82x3.79 = $5.28 per gallon of which 70% is tax (incuding 25% VAT).
6131. wonkers2 - 2/27/2006 12:55:17 PM
Thanks! Here the price today is $2.29, per gallon including tax. If the U.S. is serious about conserving oil we shoud phase in a gasoline tax over 5 years or so to bring the gasoline price here up to European levels. That would cause car buyers and manufacturers to shift to more fuel efficient vehicles.
6132. anomie - 2/27/2006 1:37:05 PM
My family thinks I'm nuts wen I say the feds should impose a 2 dollar tax per gal on gas - or even 3 dollars to bring it to about $5/gal. We're gonna end up paying that amount anyway so we might as well keep the money here instead of the middle east.
6133. PelleNilsson - 2/27/2006 2:37:20 PM
Your last sentence makes perfect sense, anomie.
6134. wonkers2 - 2/27/2006 2:39:44 PM
Yes, it does! But neither party is proposing a gasoline tax increase.
6135. wonkers2 - 2/27/2006 2:40:03 PM
Yes, it does! But neither party is proposing a gasoline tax increase.
6136. arkymalarky - 2/27/2006 4:56:29 PM
We're far more rural and spread out than countries where that works, and we don't have a practical mass transit system. It would be yet another financial blow to the working poor, whose numbers are growing at an alarming rate already.
6137. wonkers2 - 2/27/2006 4:59:03 PM
Well, what's your solution to the energy problem? The rural and working poor would be driving smaller cars and pick-up trucks. Now they are driving huge, old gas-guzzlers. They wouldn't necessarily be spending more on gasoline because they would be using less of it.
6138. arkymalarky - 2/27/2006 5:13:57 PM
High gasoline taxes haven't been a solution elsewhere, except to the degree they've increased use of available mass transit. If you have to drive, you spend more, even if you buy a more economical car. The working poor aren't the ones buying Hummers and Dualies, and they can't afford to upgrade to anything newer and more efficient.
I suggest we shrink to the size of Switzerland. Or dump California, New York, and Texas off on our neighbors. Arkansas would be a wealthy state if we lopped off the Delta and gave it to Mississippi, who wouldn't notice the difference anyway.
The point is, the people who suffer the most from such well-meaning policies are the ones middle-class liberals think of last, and they wouldn't be thought of at all if they didn't squawk every time someone suggested that the way to solve a problem was to dump more costs and take away more services from them. And then the same liberals wonder why all those western and southern states are Red, and instead of looking at things a little beyond their own suburban noses, they write them off as backward hicks who don't know any better.
The only thing that would really affect the situation in the US is if we had a national transit system and excellent mass transit in urban/suburban areas. All increasing individual gas costs would do is make it more expensive for those who have to drive because they have no choice. High gasoline also hurts public schools in urban and rural areas because they depend so much on school buses.
6139. wonkers2 - 2/27/2006 6:04:40 PM
No, mass transit isn't the only thing that would really affect the situation. Increasing gasoline taxes would cause consumers to buy more fuel efficient cars and cause car companies to design more fuel efficient cars instead of wasting money on Cadillac Escalades and rear wheel drive high horesepower hot rods which are the current rage in Detroit. The alternative would be for the government to involve itself in designing cars, which would be a mistake in my opinion. CAFE standards have helped somewhat, but they are riddled with loopholes.
Providing inducements for fuel economy would benefit the entire country, INCLUDING the poor. Ditto for more effective gun control, which you also tagged as something proposed by rich liberals.
6140. wonkers2 - 2/27/2006 6:06:16 PM
There are plenty of things that should be done to benefit poor people in this country. Perpetuating the production of fuel inefficient vehicles isn't one of them.
6141. arkymalarky - 2/27/2006 7:06:40 PM
People who can afford to buy new cars would benefit. No one else. Don't tell people who can't pay the gas to evacuate a hurricane in Mississippi--some literally were asking people to borrow $40 to tank up just so they could leave--that paying more will help their grandchildren breathe better. It's crap, and they know it. Poor Americans don't benefit jack from higher gasoline. They just get poorer and struggle more.
If you want to affect car purchases, slap a tax on new purchases of inefficient vehicles and give more benefits to the poor so that maybe they can drive to one job instead of two or three and meet their needs. As it stands now, rich morons who buy tanks to drive actually get yet another tax credit, while the IRS HOLDS the refunds of the poor!
You ignored the point that people will drive what they have to in order to go where they have to. If the middle class and wealthy were paying what they should to benefit the country as a whole, they'd have more options. Instead of slapping on a tax that they can adjust to, they'd be spending tax dollars on some real alternatives. You can't simply add to what people HAVE to spend without giving them any viable alternatives. That's what's been done to death already, and it hasn't helped anything except to expand the already shameful poverty numbers in this country.
We need a returned to the old Populist Party. The Real One, not the cheap knock-off that now calls itself the Liberal Wing of the Defunct Democratic Party.
6142. anomie - 2/27/2006 7:15:39 PM
I think W2 is correct. We'd see a big driving culture change.
Arky: I wouldn't suggest the tax unless I thought the poor and everyone else were going to pay the higher prices anyway. A tax would force a shift in priorities sooner.
I drive to work everyday with excess vehicle capacity in terms of seating, gas milage, engine power, and even quality. Multiply that by millions and imagine how much fuel could be saved with small 2-seater 750cc Smart cars as a second vehicle.
6143. anomie - 2/27/2006 7:19:58 PM
Arky 6141 I agree with your second para.
Answer me this. If we're going to pay $5/gal - which I think we will in the next few years - wouldn't you rather have that money go to the Feds than the oil companies?
6144. arkymalarky - 2/27/2006 7:21:44 PM
That makes no sense. If they're going to pay the higher price without the tax, then the tax drives what they pay even higher. The ONLY thing that will force a shift in priorities is to make the consumers--the middle class--hurt. The rich have dumped on the middle class and the middle class tries to pass it on to the poor and act like we're all making sacrifices. But while the middle class thinks it's doing "a good thing" with easily absorbable impact on them, the wealthy are taking control of this country at an alarming rate. So while we're deciding whether a gas tax would help make the poor drive more fuel efficient cars, Exxon records the biggest profits of any company in history while congress passes them a $7 billion dollar present--and the middle class band plays on.
The road to hell is paved with good intentions, and the poor in this country have been good-intentioned to death by people who really don't have to suffer the effects of the decisions they make, from NCLB to taxes, on the underclass.
6145. arkymalarky - 2/27/2006 7:22:56 PM
I answered the question without seeing it, Anomie. Right now we're paying through the Feds straight to the oil companies--except it's on credit, just like everything else middle America has.
6146. arkymalarky - 2/27/2006 7:24:27 PM
I'm sick to death of these easy fixes people who don't live with them offer up for the rest of us. People are going to have to quit examining the bark on trees and step back to look at the forest that's practically swallowed them up.
6147. anomie - 2/27/2006 7:28:50 PM
I'm not proposing it as a do-gooder. I'm saying the 2-dollar tax will create enough conservation to keep the actual price lower, longer. W/o the tax, the price will rise faster and the poor will still pay it.
The middle class will respond too. Why do you think our gas prices are so low? It's a middle class political issue. Our elected leaders are afraid to be blamed for any increase in gas prices, so they do nothing to help the long term. That's why I'm quite sure the tax won't be imposed. I'm also quite sure the prices will rise to the $5 point before long. A high price w/o the tax is even worse for the poor.
6148. arkymalarky - 2/27/2006 7:33:01 PM
I've argued this for three years or more now wrt education. "Please don't close our rural schools. It will negatively impact the poor, it will ruin their economy and the community that supports them, and their children will not be able to assimilate and participate and get the maximum benefit from free public education. Minority children will lose influence in the schools and their role models will lose leadership positions and their close support network will be disrupted, to their disadvantage."
"They will be better off. They'll have more classes to choose from and better opportunities. We know better than they do what they need."
So they do it, and don't bother to even look and see whether they were right or not. They don't look at the impact the laws they pass and the decisions they make have on people. It doesn't hurt them, so they're fine with it. And they end up wrong, so kids travel an hour or more one way from kindergarten on and schools are dumping grounds for poor kids, and large school dropout rates are over 30%, even with fudging to make it look like they're successful. And then they start punishing the large poor districts and the people who work in them and the kids who have to go to school there, and they promote charter schools and vouchers so they can get a few select children out of a failed system on the government's dime and leave the rest behind. Until they have a hurricane and the masses of inner city poor wash up on our televisions for us to feel sorry for.
6149. arkymalarky - 2/27/2006 7:34:13 PM
I agree with you, Anomie, but I disagree that the tax needs to be on gasoline. It needs to be on the people who can pay it for a change. Including me.
6150. arkymalarky - 2/27/2006 7:40:23 PM
Nobody has the balls to stick it to the people who deserve to pay--the ones who've caused the brunt of the problem in the first place. So it will never change, and adding more to what the poor have to pay is just dumping on them.
In Arkansas it takes 3/4 vote in both Houses to pass almost anything but a sales tax, which can pass with 51%. So guess what poorest state in the country has one of the highest rates of regressive tax in the country? And the rich scare the middle class and get them to call their legislators so there's no way any other kind of tax will pass. Corporations drive the policies on the national and state level. And that didn't just start with the Bush administration, and it's been with the ignorant complicity of the supposedly educated middle class, so no one takes the money from the ones whose policies are most harmful to everyone. If we wanted to have an impact we'd make it impossible to make the kind of profits oil companies have made in this country.
What state was it that made Wal-Mart provide health insurance to its employees? That's the direction ANY mandates or taxes should take in this country. The poor have borne enough of the burden. And for that matter, so have most of the middle class, spoiled as they are.
6151. wonkers2 - 2/27/2006 7:41:59 PM
There are many problems and many fixes will be needed, none of them easy. Higher gasoline taxes are not an easy fix, but they are the fix supported by the majority of knowledgeable people who have studied the problem. Again, Arky, I'd be interested in hearing any positive thoughts you may have on energy conservation. [By the way, we haven't even touched on global warming as another reason to conserve energy and hold down the rate of increase in the burning of fossil fuels.]
Nobody's proposing fuel conservation as a remedy for the problems of rural or urban poor or as a way of improving income distribution. They require improvements in health care, education, and a fairer tax structure, etc. All of these things are within our power to accomplish if we only had the political power and will. Ditto for gas conservation. It's not rocket science. We know how to do it with present technology.
6152. arkymalarky - 2/27/2006 7:49:16 PM
but they are the fix supported by the majority of knowledgeable people who have studied the problem.
Cite? Or even a convincing explanation of cause and effect would be good.
I've given plenty of suggestions. The simple bottom line is that the poor can't take any more of the burden, and to suggest policies that motivate the middle class at the expense of the poorest is no longer an acceptable "fix." The population of poor is growing, and we already have a higher percentage of people in poverty than any developed country in the world. And that's with an extremely low unemployment rate. These aren't welfare queens we're talking about.
6153. arkymalarky - 2/27/2006 7:50:45 PM
And, fwiw, I don't give a rat's ass about what knowledgeable people have to say about the need to put more financial burdens on people who've already paid far beyond their share.
6154. anomie - 2/27/2006 7:53:49 PM
I'd go along with a gas coupons for people making under a certain amount. But taxing something else will not help the oil price hikes.
I'm all for local schools too. Rural or not, the more local the better.
6155. arkymalarky - 2/27/2006 7:58:07 PM
I think tax credits for buying fuel-efficient cars and extra taxes for those that aren't are as good a start as any, but nothing's going to really work unless there's something to economically drive alternatives like the hybrids and eventually getting off fossil fuels altogether.
The thing is, we're not a small country, and national transit has never been very feasible. And for whatever reason, with the exception of a few metropolitan areas, urban transit has never done very well. Truth be known, rural travelers aren't the main source of the problem. There aren't enough of them. It's cross-country hauling and urban/suburban commuting that's caused the concentration of effects of fossil fuel consumption.
6156. wonkers2 - 2/27/2006 8:03:13 PM
"I don't give a rat's ass about what knowledgeable people have to say"
You would rather rely on what the oil companies, the car companies, politicians and unknowledgeable people have to say?
Hybrids are over-rated. Hydrogen fuel cells may be the best solution in the long run. But that's a long way off. In the meantime it's important to stop pumping CO2 into the atmosphere at an increasing rate.
6157. anomie - 2/27/2006 8:03:47 PM
I can't cite any experts except to say the gas tax idea is not original with me. I heard about it on the radio a while back.
6158. anomie - 2/27/2006 8:09:10 PM
My vision is that most commuters will drive small, perhaps electric, simple vehicles as their primary means of daily transport. More narrow lanes to reduce traffic congestio...more bikes, scooters. For out of town or cross country trips you would rent, or reserve a car from your "car club".
I will not live long enough to see it.
6159. arkymalarky - 2/27/2006 8:16:49 PM
You would rather rely on what the oil companies, the car companies, politicians and unknowledgeable people have to say?
Wonkers, your inference bears zero relationship to anything I posted. So you think it's alright for Exxon to make record profits AND get billions of dollars from the government? Why don't you grab that knee under your desk and actually read what I posted?
You simply cannot make any significant changes until there is some incentive somewhere to make non-fossil-fuel vehicles. Urban/suburban transit fixes like what Anomie mentions should be feasible if the financial incentive were there, and that would have a huge impact. Poor people have to work. They have to get there by the means that are available to them. Increasing regressive consumption taxes doesn't bring enough benefits to offset the costs. Tax incentives--both positive and negative--and incentives to innovate, would have a lot more impact on the country as a whole and would benefit a lot more people while minimizing negative impact on those least able to absorb it.
6160. anomie - 2/27/2006 8:24:07 PM
The biggest motivation for the middle class would be the gas tax. If we can mitigate it for the poor, then we should.
Tax credits, deductions and penalties would help too if done right. SUVs get a tax break as "trucks", so we're clearly not on the right track now.
6161. anomie - 2/27/2006 8:26:13 PM
W2
What I understand you saying is that if we don't use politics to determine our energy policies and prices, then the industry will do it for us. Either way, the price goes up.
6162. anomie - 2/27/2006 8:27:01 PM
You can replace "politics" with "government" in the above if you like.
6163. arkymalarky - 2/27/2006 8:28:53 PM
I don't think the middle class would be significantly motivated by a gas tax that isn't high enough to make them want to buy a more efficient vehicle or commute, and that's far too much added expense to the working poor. I think the same thing could be accomplished at the point of purchase, rather than through yet another regressive tax, and the effects on auto manufacturers and oil companies would still be there. But I still don't think it will amount to much in the long term--the economy simply fluctuates and adjusts to such changes too rapidly--without a willingness on the government's part to A) incentivize innovation and B) end the ever-growing corporate welfare benefits to oil companies.
6164. arkymalarky - 2/27/2006 8:30:51 PM
"carpool" is what I meant above, not "commute."
6165. anomie - 2/27/2006 8:41:25 PM
Point of sale taxes have some consequences. People will keep old cars longer. Car workers will lose jobs. Cost of efficient cars will rise with tide, hurting the poor. Probably more bad news we haven't thought of yet.
I'm back to the gas tax. We could find a way to make it progressive enough to help the poor, I think.
6166. wonkers2 - 2/27/2006 9:02:11 PM
Arky is correct about one thing at least sales taxes are regressive and increased gasoline taxes would weigh heaviest on low income people as do Social Security taxes. That is a legitimate issue that should be addressed. The regressivity of gasoline taxes is a valid consideration, but, as anomie said, one that could be addressed in other ways. Of course Bush isn't about to propose or allow a big gasoline tax increase, and the Dems haven't shown any enthusiasm either. So, we'd all better plan to move to high ground. Sell your Florida condos! Learn Arabic! Familiarize yourself with the Koran! Oil up your guns and stock up on ammunition!
6167. anomie - 2/28/2006 5:38:01 AM
Perhaps technology can help us out. A chip installed in each vehicle signals the gas pump to raise or lower the price according to the type of vehicle. At current prices, a Toyota Prius would pay $2 while a Ford Expedition would pay $6.
6168. alistairconnor - 2/28/2006 11:27:45 AM
George Monbiot has a riff on this theme, Ano :
For the sake of the world's poor, we must keep the wealthy at home
an utter, unparalleled disaster. It's not just that aviation represents the world's fastest growing source of carbon dioxide emissions. The burning of aircraft fuel has a "radiative forcing ratio" of around 2.7; what this means is that the total warming effect of aircraft emissions is 2.7 times as great as the effect of the carbon dioxide alone. The water vapour they produce forms ice crystals in the upper troposphere (vapour trails and cirrus clouds) that trap the earth's heat.
[...]
Despite the claims made for the democratising effects of cheap travel, 75% of those who use budget airlines are in social classes A, B and C. People with second homes abroad average six return flights a year, while people in classes D and E hardly fly; they can't afford the holidays, so are responsible for just 6% of flights. Most of the growth, the government envisages, will take place among the wealthiest 10%. But the people who are being hit first and will be hit hardest by climate change are among the poorest on earth.
Frequent fliers... shame on us.
6169. wonkers2 - 2/28/2006 11:51:25 AM
Great idea, anomie! The problem is solvable. Arkie, deal with it!: 55% of Americans support a gas tax increase if it would reduce dependence on foreign oil and 59% if it would reduce global warning. Here.
6170. PelleNilsson - 2/28/2006 1:07:56 PM
Arky will deal with it thus:
The poor are stuck with their ancient, gas-guzzling near wrecks. The middle class may switch to more fuel-efficient cars but it will take many years before they work their way down the value chain to the pont where the poor can afford them.
Correct me if I'm wrong, arky.
In my own view we can not let the perceived plight of the so called poor in the world's most affluent country determine how we solve a global issue.
6171. alistairconnor - 2/28/2006 1:23:09 PM
I'm in favour of heavy point-of-sale taxes on horsepower. Also for high fuel taxes.
Yes, it hurts the poor, but so does everything...
Apart from discouraging consumption, fuel taxes also have the added benefit of making alternatives more competitive (public transport, hydrogen, bicycles, staying at home)
6172. arkymalarky - 2/28/2006 9:59:01 PM
At current prices, a Toyota Prius would pay $2 while a Ford Expedition would pay $6.
And figure in an exemption for older model vehicles if it's automatically done at the pump--older enough to ensure people aren't just avoiding buying to avoid the tax.
And yes, Alistair and Pelle, the poor you have with you always. But that's not a valid excuse for sticking it to them ever chance you get, especially when more creative alternatives that target the real problems are out there. And the fact you live in a small, alternative-transportation country is evident in your posts. Let me type more slowly:
W e d o n ' t h a v e a l t e r n a t i v e s
h e r e.
Our populations are not concentrated enough to use bicycles and we're not inter-connected enough to work from home.
I know! Tax everyone who has a car, no matter what the make and model, valued at over $15,000 an extra set amount when property is assessed every year--weighted according to the amount of value over the $15,000--and use a portion of it to get everyone in the US with incomes below the poverty level a fuel-efficient car--one per family--as long as at least one member of the household has either one full-time or two part-time jobs amounting to full-time hours.
In my own view we can not let the perceived plight of the so called poor in the world's most affluent country determine how we solve a global issue.
Then you'd best start focusing on China and India. Or focus on the non-plight of the so called not poor. There are plenty of them with plenty of money. They don't need 5000 sq ft houses and three new vehicles. Changes in how expensive it is for poor people to get around in the US will not determine the course of the global issue of automotive fossil fuel consumption.
"So called poor" people aren't the problem. Over 100,000 people couldn't leave New Orleans because they didn't have transportation. The problem in the US is the suburban middle class who insist on keeping up with the Jones' Hummers and Suburbans and commuting 30 minutes one way at a minimum to get to their jobs, then using those same vehicles for cross-country year-round recreation.
But it feels better to slap a broad coat of paint on the lot of them. No fuss, no muss. It stuns me that not a single suggestion here among all of them offered up deals with corporate contributions to the problem.
And there's also the simple fact that the middle class will never go for it. So instead of trying things that will 1) really work and 2) have a prayer of passing, stick it to the working poor with yet another regressive tax. They won't complain. They get that crap dumped on them all the time. What's one more?
6173. arkymalarky - 2/28/2006 10:02:24 PM
The first thing that would have to be done before any regressive tax that affects the working poor should even be CONSIDERED is to raise the damned shameful minimum wage here and provide minimum benefits to workers.
6174. alistairconnor - 3/1/2006 5:08:15 AM
I absolutely agree Arky, and yet, all of this amounts to fiddling while Rome burns. When people say "I can't support fixing A until B is fixed", they are posing a false dichotomy. Every time.
And there is the simple fact that poor people living far from the place they work with no public transport, will not be an option in 20 years, in any scenario. Transport hasn't has hardly started to get expensive, yet. We need to find ways of adjusting society to deal with that, without sticking it to the poor. But subsidising fossil fuels so that they can hang on another couple of years, is not smart.
The rise and fall of civilizations is largely conditioned by the availability of cheap energy. If ours is going to survive the current hurdle, it'll be the first. It's not going to happen without pain. Sharing out the pain is going to be an important issue.
The USA is a prime mover in both energy consumption and technology. The world stares in disbelief as you folks go on burning oil like there's no tomorrow, subsidising SUVs with tax breaks and spending peanuts on alternative energy research. I'm amazed, Arky, that you cite China and India as an excuse for doing nothing... that's Bush/Concerned territory. They are in fact doing more than the US, in many fields, but they could do so much more if the US was developing and selling them the technologies they need.
6175. alistairconnor - 3/1/2006 5:34:41 AM
It stuns me that not a single suggestion here among all of them offered up deals with corporate contributions to the problem.
Fixing the individual consumer's contribution to the problem is the hard part, especially when the prime offenders are the middle-class people who actually vote, often in self-interest. They need to be convinced of the necessity and urgency of radical changes.
Corporations are the easy part. All you need is law changes by a government that isn't under direct corporate influence ...
...
... oh.
6176. anomie - 3/1/2006 5:43:37 AM
Not sure what the corporate involvement should be. In England, corporate cars are quite common because of tax breaks, and they're usually bigger better cars than average.
As for benefits, we should finally admit that we need a national health plan. This would free up corporations to be more competitive in the world market.
6177. alistairconnor - 3/1/2006 6:01:16 AM
I think Arky is talking about larger issues concerning energy consumption by industry and business. There is plenty of stuff to be done. Buying into the carbon-credit business (aka Kyoto treaty) would be a good start, because it gives industry incentives to become energy-efficient. US consumption of energy per unit of GDP is at third-world levels, there is plenty of fat.
6178. wonkers2 - 3/1/2006 10:40:18 AM
Arky, I refer you to Tom Friedman's column on gas taxes in today's NY Times and Robert B. Semple's op-ed in tomorrow's NYT entitled "The End of Oil." Once you have completed these reading assignments we can discuss them in class tomorrow! Who's Afraid of a Gas Tax and The End of Oil
6179. PelleNilsson - 3/1/2006 1:12:14 PM
That somebody who owns a car could be classified as "poor" is just a joke in most, if not all parts of the world. You need to come out of your American cocoon, arky. Surely, the right way of dealing with this issue is not to protect the poor from a much needed tax on gas but to bring them out of poverty.
6180. Wombat - 3/1/2006 2:23:26 PM
Maybe the poor in the US can sit at home and watch cable TV; but no flat-screen plasma models!
6181. anomie - 3/1/2006 5:45:58 PM
Pelle,
A car is survival gear in most places here. I could give you many examples of why the working poor need a car here. In any case they may not actually "own" the car. They are probably making payments to a used car dealer at 25 percent interest on an overpriced, low quality car because that's their only option. Sharing a car is quite common too. But a car they must have.
6182. arkymalarky - 3/1/2006 10:10:59 PM
I'm amazed, Arky, that you cite China and India as an excuse for doing nothing... that's Bush/Concerned territory. They are in fact doing more than the US, in many fields, but they could do so much more if the US was developing and selling them the technologies they need.
You're the one creating false dichotomies here, Alistair. It is insultingly dishonest of you to say that I'm using those countries as an excuse for the US doing nothing, or that because I complain of yet another regressive tax on poor people that I support the US doing nothing.
I think we should bring welfare back and not require people to work two or more jobs for less than a living wage. Problem solved. They're not burning up gas going to work and suburbanites can continue to pipe dream about solutions they never really try in any real way to implement. If they can't stick it to people farther down the chain, they don't do it.
You simply do not understand the socio-economic and demographic realities of the US, but your dismissal of the working poor is enlightening--what was that French line from so long ago? Oh yeah. Let them eat cake.
India and China, irrespectively of what the US does or does not do, have far larger populations and--especially China with its attitude toward coal--will have to make sacrifices of their own for the benefit of the planet as they become more broadly developed.
And wrt corporations, I'm talking about the damned oil companies. They should be required by law to do what some congressmen suggested, and that is subsidize heating costs for poor people. They need a windfall profits tax slapped on them that finances meaningful federal assistance to the working poor--no running it through the executive branch to be pissed away, or funnelled back into the very same companies--like our joke of a Medicare drug plan.
6183. arkymalarky - 3/1/2006 10:15:27 PM
Wonkers: I have read the arguments. My brother sends me that stuff in email regularly. My point is, they don't amount to a good reason to stick another regressive tax on a population that is 1) growing at an alarming rate and 2) is becoming MORE poor. Your own post of the Krugman article is what you're ignoring. The working poor can not take on any more of the burden in this country. It's time for the middle class and upper middle class (Heaven forbid the .5% of the richest be included) kick in and make up the difference. AND ONLY THEN will things change. It's when they always change--when the middle class finally can't dump any more on the poor and have to start absorbing the economic hits themselves.
6184. arkymalarky - 3/1/2006 10:17:55 PM
Pelle, Anomie is right. You're doing what you often accuse Americans (rightly) of--applying conditions and values you are familiar with to circumstances where they simply don't fit. Come visit. I'll show you poor people who have cars, and you can decide for yourself.
And I'm dead serious. That's a standing invitation.
6185. arkymalarky - 3/1/2006 10:19:22 PM
Maybe the poor in the US can sit at home and watch cable TV; but no flat-screen plasma models!
You are one cold sumbitch, Wombat!
6186. wonkers2 - 3/1/2006 11:33:53 PM
Arkie you are mixing two distinct but related arguments. The ship is sinking and you're holding all the passengers on it hostage. Due to your fixation on one problem involving a minority all will go down with the ship. Are you sure you read Robert Semple's op-ed, linked above? Try reading it again, more slowly, and sleep on it.
6187. arkymalarky - 3/2/2006 12:08:07 AM
No. I'm not mixing anything. If the middle class are going to change they need a tax high enough to affect their behavior. That's the only thing that will impact the US, and a tax that high is simply unacceptable for poor Americans. I've stated one caveat, and you're acting like it's a wall against addressing the problem. It isn't. It's simply an adjustment the middle class don't care to make.
And anyone who supports a tax without a clear purpose, written into law, that addresses the problem is an idiot. If money isn't put into national, state, and local mass transit the increase in price will have only a short-term effect. People forget like they did in the '70s and incomes adust, and the poor just get poorer while the middle class do ok.
And this is the third freakin' post. The other two were more explanatory, but I've worked all day, had class two nights in a row, and run around like a chicken with my head cut off for two weeks in a row now. If I can't find a replacement for this sorry ass isp, I'm going to go ballistic.
6188. arkymalarky - 3/2/2006 12:18:16 AM
I'm so mad, it's all I can do to keep from going off on a cussing rant (online--I've already done it on this end). I sometimes tell my students when I'm having technical difficulties at work that if I ever got as mad at people as I do at computers I'd be dangerous.
Anyway, I'm going to bed now, but all the great minds in here can surely figure out something to address such a major world issue without making the poorest people in this country or any other have to take on any more burdens than they already have.
Maybe issue a gas card to working people who make below X amount of money per week.
6189. alistairconnor - 3/2/2006 4:30:14 AM
You simply do not understand the socio-economic and demographic realities of the US
Not true. (I'm from New Zealand, those realities are substantially the same there.) I'm simply pointing out that they are not sustainable. Your answer to rising gas and heating costs seems to be to subsidise the poor so that they can keep consuming fossil fuels at the same rate : this will not make them richer; at best, nothing will change.
You're missing my point that major social engineering is required before the "market" does it for you. When the working poor can no longer afford to drive 50 miles from their trailer to a low-paying job, then there needs to be a major town-planning revolution to find another model. Maybe give enterprises incentives to go where the workers live; maybe new, decent, low-cost urban housing programs.
Poor people in dispersed habitat are going to have to migrate to the bigger cities, where there are prospects of work. If it's not tackled through planning, the "market" alternative is likely to look somewhat like a Third World model of rural exodus : shanty towns on the urban periphery.
6190. Macnas - 3/2/2006 4:41:03 AM
I wrote a big long post before I decided to delete it. I got annoyed about the poor/not poor thing.
Taxing petrol will hurt those that are poor to start with, and will make those doing a balancing act tip over into being poor, don't forget these people, they are a bigger pecentage than what you might think.
The definitions of what is poor and what is not are in the eye of the well-off beholder. If you need petrol to get to and from work, you'll just have to foot the cost and suffer elsewhere. Those who are richer have surplus cash to offset the cost.
People who have to have a car to get to and from work, get chidren to and from school, are not policy makers and will not be driven to discover a magic fuel that can be made from a weed they find in a ditch somewhere. They just do what they have to do, and will suffer and nothing else.
Industries, such as transport and the like, will increase charges to cover the shortfall, and will also make a bunch of people unemployed.
Alternatives have to be driven by wisdom, not penalty.
6191. Macnas - 3/2/2006 4:42:33 AM
Yep, the poor and less than well-off, fuck 'em.
6192. alistairconnor - 3/2/2006 6:37:57 AM
The fact is, cheap energy has been a major part of the current general (and relative) affluence of the past 50 years. Even the poor have benefited, while remaining poor : they have been able to heat their homes and drive their cars. We're heading for a period where it's likely that the poor will no longer be able to afford heating or transport. Like during most of human history.
And those of us who are not poor (yet) are going to feel the pinch. I most certainly have less disposible income at current prices of petrol and heating fuel. When they double again, I'm going to have to adapt, and I'll have less money to inject into the economy, and it'll be the same for everyone, and economic activity will slow down as a result, and sooner or later there may be a tipping point where the model implodes.
The problem is particularly acute for poor people in dispersed habitat, but it's a problem for everyone. There is no technological fix for it : sure, other energy sources will become competitive as oil prices rise, but they won't become cheap.
6193. alistairconnor - 3/2/2006 6:38:43 AM
Arky, I'm sorry I misunderstood your reference to India and China. But I've read it several times now, and I still don't understand the point you were making.
6194. Macnas - 3/2/2006 7:32:10 AM
The model will implode eh?
Where people are, and where people work, are things that are not going to change in a hurry, if at all.
Is the countryside going to empty as people move back to towns and cause further problems?
It took about 100 years to get to where people could earn some standard of living without residing in a towerblock slum (no offence Pelle, your towerblock is very nice), going back to the first principles of the industial age is not something even the most rabid Green wants to see.
The cost of petrol will increase in any case, and as time goes on, hopefully things will adapt at the same time. Don't bring on the pain so soon via a penal system of tax, just because its the easiest thing to do. People will still have to pay for it, and will just suffer more.
I cannot see it having any great benefit, if any.
6195. wonkers2 - 3/2/2006 9:04:44 AM
Raising the gasoline tax from it's current 18 cents/gallon (compared to about $3.20/gallon in Eurpope) gradually, tapering in the increase over 5 or 10 years, is the cleanest, most practical way to wean Americans buyers and car makers away from their gas guzzling SUVs, trucks and cars with needlessly high horsepower engines. Attempting to bring about the needed change by attempting to legislate design and engineering changes would be an impractical wasteful approach because there is no agreement yet on what is the most effective approach. We hear a lot about ethanol and biofuels, but I've read that if all inputs are counted ethanol doesn't save energy and may actually use more than gasoline from oil. The issue of the regressiveness of sales and fuel taxes can and should be addressed in other ways--by an income tax credit or payment to low income people or other methods. Arky is hung up on "middle class" solutions. The problem isn't a middle class problem. All classes are driving very fuel inefficient vehicles. The mix of cars in Europe is very different from the U.S. In Europe cars are much smaller and more fuel efficient. Why? The answer is simple--gasoline costs more than double what it costs in the U.S. Gas guzzlers aren't illegal in Europe. Anybody who has more money than brains can buy them.
6196. wonkers2 - 3/2/2006 9:05:55 AM
The United States should be a leader in energy conservation. Instead it is the most profligate energy waster in the world.
6197. alistairconnor - 3/2/2006 9:09:54 AM
I said "may" implode, not "will". But the Roman Empire did not survive after they'd burned all the available firewood.
The tax is only a small part of what's needed. But organizing the changes is going to cost a lot of money, which has got to come from somewhere. In the short term, people have no choice, they have to pay more, when the price goes up (whether from market or tax reasons). In the medium term, people make life decisions based on that sort of economic constraint... house prices go up or down... new technologies come to market. Accelerating that inevitable process through tax makes some sort of sense.
But you're right Arky, it would be more equitable to finance the infrastructure and social engineering changes through progressive income tax. You and I will end up paying, either way.
(and so will you Macnas... stop sniggering)
As for tower blocks and the first principles of the industrial age... surely not, we know how to do better than that, even with declining resources.
6198. thoughtful - 3/2/2006 9:13:04 AM
There are several ways to raise the gas tax without hurting the poor. First of all, there are a lot of poor who can't afford a car anyway and use public transportation. Secondly, if you raise gas taxes, you can rebate funds to the poor through the income tax system or another tax system which will offset the severe regressivity of the gas tax.
A/C in the states, the problem is not that the poor have to move to the cities...the problem is that the service jobs the poor used to do have moved to the suburbs and out of the city center where there is little or no access to public transport or at least one with a reasonable commute.
To give you an example, the mcdonalds on i-95 in darien buses kids in from the bronx every day because they can't get local kids to work there. For the first time in my life, the city bus system now runs a bus up to our town (2 towns away from the city center) to take the city kids to our local mcdonalds to work...it stops off a few miles down the road to take people to the nursing home to work as well.
But the only way to limit consumption of energy in the short run is to make it more expensive. I remember talking to one fellow about CA and their water shortage issues. They requested people wash their cars less frequently, tried rationing what days to water their lawns, etc. etc. Nothing caused demand for water to fall until they raised the price.
Once the costs go up for energy, then the substitutes can kick in and the longer-term supply elements will kick in including the switch to more fuel-efficient vehicles, better insulation in homes and alternative energies.
6199. alistairconnor - 3/2/2006 9:25:03 AM
That's fascinating Tful, about inner-city working poor being bused to the suburbs...
Spain is rather odd in that respect... the client company I am working for (until tomorrow) buses employees from downtown Madrid to the industrial zone in the suburbs where the software factory is. In most places in Europe or, I suppose, the US, it would be the opposite (high tech business likely to be in the centre, employees coming in from the suburbs).
6200. Macnas - 3/2/2006 9:34:10 AM
Good point, I drive as economical a car as I can afford, and any fancy I might have for, say, a Landrover, is quashed by the high fuel consuption factor.
This is the case for most people here, high performance cars are very much a luxury, and SUV's, though common enough, are smaller and more efficient than those you can purchase in the US.
As for taxes, well, I pay income tax, vat tax on petrol, vat tax on the price of a car, and road tax.
All of the above are supposed to fund infrastructure, public services and road/public transport concerns.
My concern is the effect of penalising people who just about manage the balancing act between being able to live without going on social welfare and having to.
If getting to work costs more than you earn, then you might as well draw the dole.
6201. arkymalarky - 3/2/2006 5:38:07 PM
Thank you Macnas and Thoughtful!!!
Bottom line--once again--is the middle class are the ones who are going to have to change, and the money that is used to make that change has got to be put into a feasible mass transit system for the poor, who will use it. Hardly anyone in the US rides the bus except poor people, as it is.
And it's also important to remember that we really don't have a welfare system any more. We have benefits for low-income people, but since Clinton's welfare reform it's virtually impossible for a healthy, unskilled worker to get public assistance, and the system has become an incredible state burden, especially for a state like AR, which doesn't have much of a tax base and a lot of people to subsidize, even though most of them have jobs.
6202. arkymalarky - 3/2/2006 6:29:19 PM
You and I will end up paying, either way.
That's absolutely fine by me. I could afford a new car (though it was painful) that is very fuel and environmentally efficient.
6203. arkymalarky - 3/2/2006 6:31:00 PM
I like my gas card idea, actually.
6204. arkymalarky - 3/2/2006 6:34:31 PM
And the gas card would be non-transferable and would fund by the gallon, not the dollar, so it wouldn't be subject to price fluctuations--renewable once a month, but not cumulative.
6205. arkymalarky - 3/2/2006 6:36:48 PM
I wrote a big long post before I decided to delete it. I got annoyed about the poor/not poor thing.
I'd have loved to read it, Mac.
6206. arkymalarky - 3/2/2006 6:45:29 PM
And--use income tax returns to determine eligibility and send the card within X number of days after the return has been received, so it will be subject to a standard yearly review.
6207. Ulgine Barrows - 3/3/2006 6:33:12 AM
income tax, me hate.
6208. wonkers2 - 3/6/2006 9:57:45 AM
Rachet, Rachet and Bingo
"Too often executive compensation is ridiculously out of line with performance. That won't change, moreover, because the deck is stacked against investors when it comes to the C.E.O.'s pay. The upshot is that a mediocre-or-worse C.E.O.--aided by his hand-picked V.P. of Human Resources and a consultant from the ever-accommodating firm of Rachet, Ratchet and Bingo--all too often receives gobs of pay from an ill-designed compensation arrangement." Warren Buffett on executive compensation.
6209. thoughtful - 3/6/2006 1:00:37 PM
Exactly what is the incentive for ceos and their boards to fix the overcompensation problem?
Less than none.
6210. wonkers2 - 3/6/2006 6:33:22 PM
Concern for their fellow man? Shame?
6211. wonkers2 - 3/6/2006 6:43:00 PM
AMERICAN SHAREHOLDERS ARE TITHING!
"Perverse incentives notwithstanding, this focus on metrics is a sad acknowledgment by corporate directors that they cannot control themselves or the pay they hand over to their top five executives. In one study by Lucian A. Bebchuk of Harvard and Yaniv Grinstein of Cornell, found that from 2001 to 2003 such pay totaled roughly 10 percent of corporate profits at public companies. IT'S A BIZARRE TWIST ON THE TRADITION OF TITHING, ONE THAT BENEFITS THE RICH INSTEAD OF THE NEEDY AND CONSCRIPTS AMERICA'S SHAREHOLDERS AS INVOLUNTARY DONORS. Executive Greed/Shareholder Tithing
6212. alistairconnor - 3/7/2006 7:03:14 AM
What peak oil looks like
Maybe it was May or December 2005. Maybe it's this month. Maybe even next year...
6213. wonkers2 - 3/26/2006 9:37:02 AM
Another ugly chapter of corruption and greed on Wall Street? Here.
6214. wonkers2 - 3/26/2006 9:39:58 AM
Which side are you on, boys and girls, which side are you on? Gretchen Morgensen fights for stockholders!
6215. wonkers2 - 3/26/2006 9:45:52 AM
Anybody own Pfizer? You have been fucked royally by Dr. McKinnell, Pfizer CEO!
Morgensen: "Even though the stock has lost 43 percent of its value since he became Pfizer's chief in January 2001, Dr. McKinnell has received $65 million in salary, bonus, restricted stock and incentive pay.
"More troubling to Mr. Rowe is what Dr. McKinnel stands to receive when he retires from Pfizer in 2008: a pension benefit that is now worth $83 million. That is, $6.5 million a year for as long as he lives and THE BIGGEST PENSION BENEFIT FOR A CHIEF EXECUTIVE AT ANY OF THE 500 COMPANIES IN THE S & P stock index. "
6216. wonkers2 - 3/30/2006 1:37:05 PM
Ethanol subsidy is a waste of taxpayers' money. Ethanol
6217. wonkers2 - 3/30/2006 2:32:28 PM
Government action needed to stop this INSANITY!
6218. Marc-Albert - 3/30/2006 8:21:34 PM
That anti ethanol subsidy article is stupid.
Unfortunately, growing and harvesting the corn, and heating and reheating the fermented corn to produce ethanol require a vast amount of energy. Ironically, most of this energy to produce ethanol comes from fossil fuels
Stupid. Obviously if we keep on producing more and more ethanol, there will come a moment when the energy needed to produce ethanol will come from....ethanol.
I read somewhere that 50% of Brazil's sugar harvest this year is earmarked for the production of ethanol. Which is one of the reasons the price of sugar is going up and up and up.
6219. alistairconnor - 3/31/2006 2:55:07 AM
The future of green fuel is small-scale catalytic reactors that produce useful stuff out of various feedstocks.
Key elements :
- must not require large energy inputs to make it work (cf current ethanol processes)
- must be viable on a small scale, for local use. The cost of transporting feedstock to a big factory, then of redistributing the product, is the other killer in the energy equation.
6220. alistairconnor - 3/31/2006 2:56:17 AM
Problem : small-scale, distributed technologies like that don't attract corporate interest, or government subsidies, in the main. Because there are not big bucks to be sucked out of it.
6221. wonkers2 - 3/31/2006 6:07:27 AM
"Stupid." If it takes more than a gallon of ethanol to produce a gallon of ethanol we'll be going in concentric circles like the legendary gooney bird and disappear up our own assholes.
6222. alistairconnor - 3/31/2006 7:06:53 AM
Obviously if we keep on producing more and more ethanol, there will come a moment when the energy needed to produce ethanol will come from....ethanol.
To cite the article :
it takes 29 percent more fossil fuel energy to make ethanol from corn than the fuel produced, according to a recent study at Cornell University and the University of California-Berkeley.
If the numbers are accurate, you would need 129 litres of ethanol to produce ... 100 litres of ethanol.
I suspect that there is a certain amount of pork involved. Farmers and companies raking in government cash. No matter how high the price of oil, it can never work unless they can considerably streamline the industrial process.
This may make sense in the short term, in order to ramp up production and consumption, but only if there is a good prospect of turning the equation around. Otherwise, they are setting up a situation where biofuels will be discredited.
6223. wonkers2 - 3/31/2006 8:28:27 AM
Countries with top and bottom suicide rates. Here.
6224. Marc-Albert - 3/31/2006 8:45:16 AM
Hmmm.. The unreliability of statistics that come from many developing countries.
Particularly statistics on hot topics or topics that are taboo in those countries.
According to official Egyptian statistics, there are zero homosexuals in Egypt and near zero suicidees.
6225. wonkers2 - 4/2/2006 6:15:37 PM
American wage earners report 99% of their income but small businesses report only 57%. This will make Americans angry.
6226. jexster - 4/4/2006 1:05:19 PM
This is a great site , a Wombat site calculating deaths in 20th century wars from many angles and comparisons
I thought this striking because it shows just which country's generation was "great".
Why I get pissed at Tom Hanks and that plagiarizing historian from NOLA..what's his name..why I cannot watch another WWII documentary - they tell such a marginal tale, God Bless America
But one example. No battle WWI or WWII in which US forces participated makes the top 20. Normandy 23. How often have we been regaled with tales of derring do on the Longest Day et seq. Well Operation Bagration was launched just three weeks after the invasion at Normandy. Over twice the casualties in that one operation in which the Russians advanced hundreds of miles, roughly as far as the Western allies managed between June 1944 and May '45. We have great debates about Rummel, von Rundstedt, Panzers, Pas-de-Calais, horror in the hedgerows...but it was a sideshow.
The Germans were fighting Russians, we were more or less a nuisance. Had Russia not had three Fronts facing the Germans in 1994, the Allies would have been slaughtered at Normandy and what would have been left of the force, back in England within a week.
The Russians tied up 34 German divisions, some 800,000 troops (not counting the hundreds of thousands in Army Group South) Killed 130,000 and trapped another 40,000 in the Minsk cauldron - in 8 days
1. Leningrad, World War II (8 Sept. 1941-27 Jan. 1944) 850 000
David
2. Stalingrad, World War II (Sept. 1942-31 Jan. 1943): 750 000 k.
3. Moscow, World War II (Sept. 1941-Jan. 1942): 719 000
4. Kiev, World War II (7 July-26 Sept. 1941): 678 000
5. 1st Smolensk, World War II (10 July-10 Sept. 1941): 535 000
6 . Voronezh-Voroshilovgrad, World War II (28 June-24 July 1942): 371 000+
8 Operation Bagration or 2nd Belorussia, World War II (23 June-29 Aug. 1944): 350 000
22 Okinawa, World War II (1 April-21 June 1945): 148 000
23
6227. jexster - 4/4/2006 3:51:04 PM
Tiger Tank Operation Bagration
T-34 Breaking Through Nazi Lines
6228. alistairconnor - 4/13/2006 2:51:34 AM
Stiglitz on China : in praise of a planned market economy
Very upbeat, where China itself is concerned.
But for those living on borrowed Chinese money, the outlook is cloudy :
China's role in the world and the world's economy has changed. Its future growth will have to be based more on domestic demand than on exports, which will require increases in consumption. Indeed, China has a rare problem: excessive savings. People save partly because of weaknesses in government social-insurance programmes. Strengthening social security (pensions) and public health and education will simultaneously reduce social inequalities, increase its citizens' sense of wellbeing, and promote consumption.
If successful, these adjustments may impose enormous strains on a global economic system that is already unbalanced by America's huge fiscal and trade imbalances. If China saves less - and if, as officials have said, it pursues a more diversified policy of investing its reserves - who will finance America's trade deficit of more than $2bn a day?
6229. alistairConnor - 4/22/2006 2:54:20 AM
I'm soaking up the Oil Drum at the moment. Smart people.
Here's a quote from the site :
"I'd put my money on solar energy… I hope we don't have to wait til oil and coal run out before we tackle that."
—Thomas Edison, in conversation with Henry Ford and Harvey Firestone, March 1931
And another:
"Pessimism of the Intellect; Optimism of the Will."
—Antonio Gramsci
6230. Adam Selene - 4/26/2006 6:10:22 PM
Love of cars, economics, fuel prices, and freedom of mobility... (did I get it all?) Discussion continuing from the Religion and Philosophy Thread.
Ok. First, the oil industry is market driven AND oligarchical/politically supported. Sure prices are influenced by supply and demand. But the illusion of scarcity is enhanced by politics. And access to cheap supply is definitely enhanced by foreign policy, if enhanced is not too trivial a word for it.
Second, energy density of hydrogen as a fuel is not the correct metric. It's energy density per dollar per mile that matters. I don't care if you have to fill my tires with hydrogen to store enough... if it's cheaper per mile that gas, and I only have to fill up once every 1 to 2oo miles, then I'll bite.
Third, the fact that it costs more energy to store it in hydrogen than you get out is not relevent. What is relevent is the cost. If I use hydroelectric, or nuclear, to generate per mile hydrogen cost at a lower cost than using gas, then hydrogen is a win.
6231. Adam Selene - 4/26/2006 6:11:00 PM
Damn toys. Jex.. you started it I think.
6232. wonkers2 - 4/26/2006 7:40:01 PM
Cars may run on hydrogen from waste water plants. Here.
6233. wonkers2 - 4/26/2006 7:46:55 PM
Five ways to produce hydrogen Here.
6234. Adam Selene - 4/26/2006 8:02:58 PM
Is Slackjaw still around? I remember him fondly from my past visits...
6235. alistairconnor - 4/27/2006 3:16:06 AM
And access to cheap supply is definitely enhanced by foreign policy
I'm pretty sure this is a fallacy : perhaps the most dangerous fallacy of our age.
Can you think of any cogent examples of this working, Adam?
The US doesn't get cheap supply from anyone, as far as I know : it's market rates everywhere. The Soviet Union used to do cheap supply to its strategic satellites; there are still some vestiges of this, but on the evidence of the bust-up between Russia and the Ukraine on gas prices, it's definitely on the way out.
Think about it : "access to cheap supply" implies that someone is constrained to sell to a preferred customer at below-market rates. Who is currently, or is likely in the near future, to sell petroleum to the US at below-market rates?
Bearing in mind that "the US" is not a customer anyway : it's international oil companies who are doing the buying and selling.
Some people imagine the near future dominated by "resource wars", which will be won by the US, since it's the only military superpower... I think that's a crock of crap. I think Iraq is a counter-example (to the extent that control of Iraqi oil was part of the motivation for the war).
I don't think, for example, that the US can take control of Venezuela's oil. Do you?
Do you want Bolivarista urban guerillas taking revenge in US cities?
6236. alistairconnor - 4/27/2006 3:28:40 AM
To put it another way : what you're talking about is rationing. Someone decides to dole out rare resources, not according to what the market will bear, but by fiat.
That may well work, within a given country, and may even be optimal. But on the international oil market?
In sum : I don't think the US, for all its military might, is in a stronger position than anyone else in the competition for resources. In fact, I think it's in a much weaker position than other big players such as China (more money to throw around) and Russia (exporting energy).
The strategy of Russia is interesting in this respect. For political reasons, Europeans are reluctant to sell their gas networks to the Russians. Whose response is : OK, so if we can't control distribution in Europe, we'll pipe our gas to Asia instead. A purely commercial strategy. And a winning one.
6237. alistairconnor - 4/27/2006 3:36:25 AM
About hydrogen :
I suspect you're still thinking, implicitly, that we're talking about commuting into town in two-ton SUVs getting the equivalent of 10 to 15 mpg. In which case, the extra weight imposed by hydrogen is relatively insignificant.
I'm thinking that the dominant commuter vehicle, in ten years from now, will be less than half a ton, getting the equivalent of 100 mpg, like the Loremo. I don't think that format will work with hydrogen; not sure about battery power.
6238. alistairconnor - 4/27/2006 5:59:19 AM
OK, I'll address Res's latest.
Vintage Res : in your original post, you say
I think it's an interesting question as to whether or not it is moral to force people, via price pressure and taxation, to stop driving so much.
Rather elliptic.
And that has been redefined to mean :
In any case the original question on the morality of letting the market take a crash course versus intervention does not hinge, thankfully, on conspiracies or the greed of oil companies. There are lots of other tools available, from tax and incentives to enforcing higher standards of fuel economy. Gasoline users could start having to pay some scarcity rent on the resource or pay a tax to account for the 'real' cost of the gasoline, including the environmental cost of it.
... i.e. having conceded that there's not much point in wringing our hands about the morality of market prices, you're advocating forcing people to drive less through taxation.
Fine!
More radically, governments could start nationalizing oil production and refinement,
... and what good might that do? (see my previous posts)
and of course there are always alternative fuels.
[...] If you can produce a 60% efficient means of powering your car, your fuel only needs to produce half as much energy as gas, and so on.
... yes, but gas will still be twice as energy-dense. What's the optimal fuel for a fuel-cell car, Res?
I'm a bit astonished that for you the question of the morality of this sort of intervention into the market reduces to a question about the Invisible Hand.
Actually, I was just making fun of your ingrained American-paranoid-leftist instinct... the oil industry manipulating prices... that's a red herring, and if we can evacuate that, there are plenty of important issues to talk about!
6239. alistairconnor - 4/27/2006 6:10:35 AM
Bugger. Erratum : un-italic the last three paragraphs.
On the other hand, I don't share your optimism about the sudden availability of cheaper, more fuel-efficient cars (cheapness is hugely important, not only in affordability, but in the total energy cost of a vehicle over its lifetime). It will come, but the industry has done absurdly little to prepare for it, and, arguably, has been functioning in cabal mode to slow it down.
For example : Renault makes a cheapish model in Slovakia for the eastern european market : solid suspension for rough roads, no electronic bells and whistles etc. To avoid parallel importing, they also make it available in France... but no advertising, and a waiting list of several months (my ex-wife just got one).
It will be very interesting to see how car makers react. It's not just a matter of breaking ranks, but of designing and tooling up to mass-produce appropriate models cheap enough. Peugeot-Citroen have a diesel-hybrid setup designed, but it's too expensive, they just got a government research grant to industrialize it.
For the US, perhaps the best course would be to start massively importing the most economical small diesels, e.g. the Toyota Yaris or Citroen C3. US car makers will thus be forced to adapt or perish.
6240. alistairconnor - 4/27/2006 6:10:54 AM
double bugger.
6241. alistairconnor - 4/27/2006 6:13:02 AM
As for alternative fuels : If gasoline suddenly quadruples in price, fuels such as biodiesel will look astonishingly cheap in comparison. I suspect biodiesel will quadruple in price too... based on the fossil fuel inputs... ethanol too.
6242. alistairconnor - 4/27/2006 7:03:49 AM
One more thing Res:
If you think there isn't rampant manipulation of the oil market, what can I say? You're lacking about 30 years worth of knowledge. Are you really lacking that knowledge, Alistair, or are you just being obstinate in your sing-song fashion?
Well. Of course there has been manipulaton of the oil market in the last 30 years. OPEC mostly : they managed to force prices up, then lost control of supply when some large non-OPEC fields came onstream, then subsequently managed to more or less manage output to raise or lower prices a bit, then had a bust-up that led to embarassingly cheap oil in the 90s....
.... then they completely lost control of prices, a couple of years ago, when the market came to understand that they didn't have any spare capacity.
So, I wonder who it is who has the power to manipulate prices these days? And by what mechanisms? In your head, I mean?
How much of a $73 oil price is due to oil-company manipulation, Res? Fifty cents maybe?
Part of current pricing is just tight supply. A boost comes from insecurity of future supply : what the heck will happen next in Nigeria? Which button will GWB push with respect to Iran? These are legitimate concerns.
A third element is that lots of speculators are piling in, anticipating easy money as prices rise. This becomes a self-fulfilling prophecy.
6243. Adam Selene - 4/27/2006 9:00:06 AM
And access to cheap supply is definitely enhanced by foreign policy ...
I'm pretty sure this is a fallacy : perhaps the most dangerous fallacy of our age. - Message # 6235
What - you don't think that the US having supported the Shah of Iran, the House of Saud, Saddam Hussein a few years ago, and who knows who else - has allowed our oil companies to more efficiently bring oil to market? What if the US hadn't done that and the USSR controlled the mid-easter oil fields? Yes - the USSR would still be here.
How you can say that the US foreign policy hasn't helped oil prices is beyond me.
6244. alistairconnor - 4/27/2006 9:11:09 AM
Did the US somehow prevent the USSR from buying hydrocarbons at the market price? I think not. I'm willing to be corrected by historians or economists, but really, I think not.
As I understand it, the US did indeed wheedle, cajole and strong-arm the unsophisticated Saudis in the 50s and 60s, very successfully, to maximize production, with US technical help. This undoubtedly made oil cheaper than it might otherwise have been; but that benefited all buyers. Even if one specific client isn't allowed to buy from one specific producer, the market evens out the price pretty much, for everyone.
Conversely, it's clear that foreign policy can definitely hinder access to cheap supply : sanctions on Iraq, invasion of Iraq, threats against Iran... But again, the perpetrator of these acts is not punished any more than any other client.
We benefitted in Europe too, from low prices; and now we're suffering from your cock-ups too.
6245. wonkers2 - 4/27/2006 9:19:31 AM
Four cylinder engines gaining on small and mid-size models. Here.
6246. Adam Selene - 4/27/2006 9:21:11 AM
alistair, I think you're taking too narrow a view of foreign policy. Look at Iraq now after Wubya's policy...and think what oil prices would be if either 1) all mideastern countries were in similar chaos, or 2) all mideastern countries were de facto soviet satellites.
I think it's pretty obvious that the US interventionist policy to prop up right wing powers in the mid east and support US oil companies to invest there with tax breaks and reduced political risk has resulted in dramatically lower oil prices than otherwise would hold. And I'm not saying we don't all pay the same market price - just that we likely would NOT all be paying the same price if the USSR controlled the oil fields. You think we pay the same price for Russion oil as the Russions do?
6247. alistairconnor - 4/27/2006 10:47:59 AM
My ghast is flabbered adam!
Count your blessings! Just look at all those countries W didn't invade!
(hasn't invaded yet...)
I have no idea what oil prices would be if mideastern countries were de facto soviet satellites.
I have, anyway, conceded that US foreign policy has probably lowered oil prices -- for everyone -- in the past, when there was a plentiful supply in places where you just had to poke a straw in the ground to get a gusher.
Now, however, it's a matter of competing for a resource where, by definition, demand equals supply (because supply is not increasing, or only marginally, and increased demand from China and India alone will soak that up easily).
That, you must acknowledge, is a whole nother game.
The Chinese, by the way, pay the world rate for their domestic oil. And they just fixed next month's domestic prices at about $80 ... you think they know something?
6248. alistairconnor - 4/27/2006 10:48:33 AM
Wonk : Four cylinders good. Two cylinders better!
6249. wonkers2 - 4/27/2006 10:52:02 AM
True enough, but I'm too old for motorcycles.
6250. alistairConnor - 4/27/2006 12:45:17 PM
No, I'm talking two-cylinder cars like the Loremo. Or you may prefer the three-cylinder GT model, but that only gets about 75 mpg...
6251. wonkers2 - 4/27/2006 12:48:51 PM
Not available here. But there's a great future for such cars.
6252. Adam Selene - 4/27/2006 2:07:22 PM
"demand equals supply"... well... only at the current price. This is tautology anyway. If you raise the price, supply goes up and demand goes down (at least, locally on the curve) and if you lower the price, demand goes up and supply goes down. Which is why price goes up as supply goes up faster than demand....
Did I skip anything from Microeconomics 101?
6253. Adam Selene - 4/27/2006 2:08:42 PM
er, that last one was backwards. Price goes up as demand goes up faster than supply.
oh for an edit button...
6254. alistairConnor - 4/27/2006 4:27:51 PM
yes Adam, but you're missing the obvious thing :
until recently, there were suppliers with spare capacity, switching it off or on to regulate the price. This is no longer the case. It will NEVER be the case again, never. The world has changed, and the world's greatest army can't fix it.
Whether "peak oil" is now or in three years' time, in terms of volume, we're already at the logistical peak, or plateau more likely : the oil is being snapped up as fast as it can be pumped. Whether or not production ever rises to 90 million barrels a day is an open question; it'll never reach 100. The price might conceivably see $ 60 again, for short periods, but it's just as likely to jump quickly to $100.
And if you've got ideas as to how anyone -- Europe, the US, or others -- can use foreign policy to secure cheap supplies... be sure and let us know.
6255. iiibbb - 4/27/2006 4:28:46 PM
Massive Yet Tiny
Angel Labs has developed a new type of internal combustion engine known as the “Massive Yet Tiny” engine. It “has the potential to replace all the existing internal combustion engines and jet engines,” according to the inventor. It reportedly has a power to weight ratio 40 times higher than a regular internal combustion engine. A 14-inch, 150-pound MYT would reportedly have the same power as a 32 cylinder diesel engine — putting out 858 horsepower.
6256. Adam Selene - 4/27/2006 7:29:12 PM
Alistair, Iraq has lots of unused capacity. Hard to milk oil when people keep blowing up your infrastructure.
And there's tons of unused capacity sitting idle in the US - democrats keep blocking it from drilling because it's in "sensitive" areas, like Alaska, off scenic coasts in California, or in the Great Lakes. Don't know about the rest of the world... any other countries blocking wells due to environmental propaganda, er, persuasion?
Anyway Alli, I forget what we were debating. What was your point again?
6257. wonkers2 - 4/27/2006 7:43:24 PM
Actually, we blew up a major piece of Iraqi oil infrastructure and we haven't got around to repairing it yet! (Although we paid Halliburton $168 million to do it.) Pipeline Fiasco.
6258. wonkers2 - 4/27/2006 7:43:57 PM
Just another Bush-Cheney-Rumsfeld fuckup!
6259. Adam Selene - 4/27/2006 8:18:36 PM
Alistair... yes, suppliers "switched off" the flow based on price. They controlled supply and therefore price as a function of demand ... wow, who knew? :p
You're saying (I think) that the world is at maximum output of supply therefore price will never go down again (right?) I, on the other hand, say that supply is a function of demand. If people will demonstrably pay more, then - Eureka! - more supply will come online.
Not that this is infinaie.... but true within current parameters.
6260. alistairconnor - 4/28/2006 2:33:44 AM
Adam, what we're debating is your assertion that foreign policy can favourably influence the price and availability of oil (can't find your original post to that effect).
I assert that you're living in the past, and I'm sort of waiting for you to provide an example or hypothetical scenario as to how that could work in the real, present world. Your example of how Iraq has lots of unused capacity, if only the turrists would stop blowing up the pipelines, is an example of the exact opposite.
6261. alistairconnor - 4/28/2006 2:46:26 AM
And as for your assertion that more demand will create more supply : again, I assert that you're living in the past.
Oil will never be exhausted : it'll just get to a price point where it's not economic to extract the remaining 50% or so which is still in the ground. Pretty much all of the huge, cheaply extractible oil fields have been discovered and are being pumped at maximum rates; and surprise surprise, they are being depleted, and according to the age of the fields, many are in decline. Some of them very steep decline.
Simply put, the smaller, more expensive fields that are brought progressively on line because the oil price makes them economic, can not replace, in terms of volume, the decline of those big fields.
And, just as importantly, (warning: big insight ahead!) the money and energy investment required to extract oil from the new, marginal fields is almost equal to what you get out. Currently, when a consumer pays $70 for a barrel of Saudi crude that actually cost $5 to produce, there's $65 left over that gets recycled, spent, reinvested, or whatever (this, I think, is the main reason that the world economy is booming despite high oil prices). But if you're extracting oil in deep stormy Arctic water and it's costing $65 and you're selling it for $70, then you're actually pouring the money down a hole.
Well, what would an economist say to that insight?
6262. alistairconnor - 4/28/2006 4:17:47 AM
OK, so I'm obsessed with the peak-oil thing at the moment.
Looks like the US army is taking it seriously.
This doesn't surprise me. They are rational people, they need to do long-term planning in order to operate in the real world. They have time to think and analyse, unlike journalists; they are not subject to electoral cycles, so have no taboos.
On balance, I think a military coup would be good for the USA.
And, of course, for the rest of the world, because they would have a rational foreign policy.
6263. wonkers2 - 4/28/2006 4:54:40 AM
A military coup would leave a bigger and longer lasting scar on the U.S. than Bush. Of course, I can't speak for Iraq or the rest of the world.
6264. wonkers2 - 4/28/2006 5:40:17 AM
Car production in China and India is projected to double, to 9 million and 3 million vehicles, respectively, by 2012. Here.
6265. alistairconnor - 4/28/2006 5:56:51 AM
I feel obliged to point out that I'm being ironic, Wonk. Just underlining the uselessness of the current crop of US politicians, of every stripe.
They are going to make a mess of the upcoming crises, that's guaranteed.
6266. iiibbb - 4/28/2006 7:02:20 AM
We should pre-emptively blame China too.
And of course... it's all Europe's fault that the US is the superpower that it became. We tried to be isolationist... but you guys had to go all Hitler on us.
6267. Adam Selene - 4/28/2006 7:10:59 AM
Oh... I see why we're not getting anywhere Wonk...
My thesis was that past political intervention has gotten us cheap gas over the last decades, and thus into the mess we're in now. Not that politics can get us out of it now. The decades of cheap gas have hindered any real effort to improve mpg's or alternative fuels, and have created a country (the US) where we have a god-given right to commute for 50 miles in tanks with one occupant.
That being said, we are far from an oil crises of the 1970's magnitude. That won't repeat itself unless our fearless leaders decide to save us with price controls again. What will happen naturally (with a few bumps of course) is that we will once again embrace small cars and mpg will again be a deciding factor in auto purchases while people variously move closer to their jobs, work at home, or take more advantage of mass transit.
Gas prices will continue to go up, people will continue to bitch, but we will muddle through it somehow. At some point biodiesal or some other alternative fuel of the day will become price competitive, will start to get economies of production scale, and fuel prices will stabalize while the world economy embraces huge productivity increases caused by labor and resources coming on line in the east.
That's my guess, at any rate. ;)
6268. Adam Selene - 4/28/2006 8:29:51 AM
I should have said, "production" increases, not "productivity" increases. Productivity increases will come from the west, as always. Well, productivity will rise everywhere (except possibly France), but we will continue our lead for the forseeable future.
6269. alistairConnor - 4/28/2006 10:18:46 AM
Smart fellow : France has the highest rate of hourly productivity in the world.
Work less, work better.
6270. Adam Selene - 4/28/2006 11:29:19 AM
Well, sure they do. When you can cherry pick your 75% best workers.... :p
6271. iiibbb - 4/28/2006 11:31:12 AM
Leaves more time for worker riots.
6272. wonkers2 - 4/28/2006 3:33:26 PM
Michael Kinsley calculates that oil companies have received at a minimum a $45 billion windfall profit from the increase in the price of a barrel of oil. This could easily form the basis of an excess profits tax. Here.
6273. iiibbb - 4/28/2006 4:42:29 PM
Local state and federal gov'ts make an assload more money than oil companies off of gas sales
47 cents per gallon, and they hardly do anything.
Oil companies make about 9 cents.
6274. iiibbb - 4/28/2006 4:47:06 PM
Oil companies take in a little less than 4% on a gallon of gass
I wouldn't exactly call that raping the public.
6275. Adam Selene - 4/28/2006 6:17:08 PM
That money will be largely reinvested in getting more oil to sell. That's the way capitalism is supposed to work. Profits are good - otherwise, no capital and no growth.
6276. alistairConnor - 4/29/2006 4:00:34 AM
Except for diminishing returns, Adam. See above.
I'll try again : if you're producing a zillion barrels of oil for $20, from a big, easy field, and selling them for $70, what are you going to do with the fifty zillion?
If oil companies "invest" them in developing smaller, tougher fields (cos the easy ones are all taken), to produce oil a few years down the track at $50, then that's a terrible waste. Because it's a sunset industry. By definition, they can't continue doing that indefinitely, they need to know when to stop.
BP, for example, is investing at least some of their spare zillions in developling renewable energy. That's smart. Because if you can produce the alternative-energy equivalent of oil at $50, you can do it indefinitely. Good long-term business plan.
Another company that seems to be behaving smart, but in a different way, is ExxonMobil. They are giving out dividends instead of investing in new oil fields. They aren't the world's most valuable company for nothing : they concentrate on highly profitable operations, and developing new fields is largely a matter of fighting over crumbs these days. On their current trajectory, they will end up liquidating themselves.
6277. Adam Selene - 4/29/2006 6:26:31 AM
alistair, the fact that newer oil fields are a diminishing return does not mean that the oil industries won't be hugely profitable for many decades yet. The problem with oil is growth in demand, not reduction in supply. Supply at the current output level will be there for several decades yet, or longer if the growth of reserve estimates keeps getting revised upwards as it has every year since I can remember.
The problem is what fuels the growth in demand? (Pun required.) Alternate fules and increased efficiency are both necessary to allow economic growth to continue. Big oil will continue to get bigger, it just can't keep up with the growth in demand all by itself (by only using oil I mean.) Hardly a death bell for oil - just an opportunity for alternatives to emerge as demand keeps pushing up the price of energy.
6278. Adam Selene - 4/29/2006 6:28:28 AM
alistair, I think we see the same reality actually - I just see the oil barrel as half full and you see it as half empty. :)
6279. alistairConnor - 4/29/2006 6:31:25 AM
Except that I think you're wrong about supply. I think we're about at peak, and the questions about when the decline starts and how steep it is, are crucial. And nobody knows the answers. Nobody. If the decline starts soon, then we're fucked.
6280. Adam Selene - 4/29/2006 6:36:02 AM
BTW - housing prices have gone up by double digits for the last decade, much faster than fuel, and housing is a much bigger fraction of the househould budget than energy. So why is no one demanding a windfall profits tax on home owners? Why do we let those homeowners just spend all those profits on consumables? It's just not fair to the next generation who can never afford to buy a house now...
I say we start a windfal profits tax movement for housing so the next generation can afford to live in the country of their birth. Who's with me?
6281. Adam Selene - 4/29/2006 6:38:06 AM
I think the growth in supply is definitely peaked, but not the barrels per day. So price will continue to climb, but not enough to create calamitous economic impact. I guess we'll find out soon enough.
6282. wonkers2 - 4/29/2006 8:57:57 PM
There's also the matter of calamitous climatic impact which may become apparent even before the economic/price impact.
6283. alistairConnor - 4/30/2006 2:35:18 AM
My answer to both questions : LEAVE IT IN THE GROUND.
There's no way to stop the finishing-off of the established, cheap fields, and we need them for a transition to a sustainable future. But developing new fields is going to cost just as much as developing sustainable, carbon-neutral alternatives.
6284. wonkers2 - 4/30/2006 9:35:17 AM
w2's nephew wrote the Public Citizen report on the inheritance tax campaign scam. Here.
6285. wonkers2 - 4/30/2006 9:42:29 AM
Challenging Toyota's Hybrid Hegemony. Here.
6286. PelleNilsson - 5/1/2006 9:45:49 AM
Globalization has some strange effects. One such is that big chunks of Swedish stone are shipped to China where they are processed into gravestones and shipped back to Sweden.
6287. alistairConnor - 5/1/2006 11:34:41 AM
G.M. says that compared with conventional Tahoes, the hybrid version will achieve 25 percent better mileage in combined city and highway driving.
I suppose that means it'll get 15 mpg instead of 11? Wow. That'll just about make it competitive in fuel consumption with a diesel version. But much more expensive of course.
Talk about fiddling while Rome burns. If they don't gear up for production of smaller, lightweight vehicles, then they will be sunk when the public gets around to demanding them.
6288. alistairConnor - 5/1/2006 11:44:11 AM
Congratulations to the nephew Wonk, that's a fine piece of whistle-blowing.
6289. Adam Selene - 5/1/2006 11:46:17 AM
Let's see... that's roughly a $500/year savings in fuel cost at $3 per gallon. What's the price premium to buy the hybrid Tahoe?
6290. Trillium - 5/1/2006 4:00:23 PM
There's a film out about "How Cuba Coped with Peak Oil", featuring interviews with Cubans who lived through the "Special Period" following loss of Soviet foreign aid around 1990.
Short summary: They didn't have fuel for agriculture or transportation, either public or private. Many people couldn't get to work or school. Others would wait 3-4 hours each way for overloaded public transit. Large collective farms that relied on heavy gas-driven equipment and fertilizers practically collapsed.
Food rationing helped Cubans to cope. Most Cubans lost an average of 20 lbs. during the "Special Period". Most Cubans thought it would only last 3-4 months, but it lasted years instead.
The result at this point is that Cuban food supplies have been largely privatized, because small independent farmers are the most productive (followed by cooperatives; the least productive are the very large collectives, which were shown with soldiers working the crops). Many people who used to work in other jobs (mechanics, lawyers) switched to farming because food was the main item that people wanted. People were growing food on their rooftops, backyard gardens, everywhere. Someone who grew good grapes on their balcony could make wine to sell, and other people wanted to buy it. Cuba's year-round growing season helped a lot.
When electricity was only available about 8 hours per day, refrigerators weren't quite so helpful. Food had to be prepared fresh. The average diet has improved since the 1990s, with more people eating a wider variety of fresh fruits and vegetables. Cuban rates of heart disease and strokes have fallen significantly.
Higher education resources have been modified so that they will be more available in smaller towns. Oxen are being used for farming and some transportation (you may recall a picture of oxen carrying farmers away from a hurricane with a cart loaded with their possessions).
It didn't look particularly unpleasant, just a modification to a lifestyle more like the way my grandparents lived.
For discussions of peak oil, this movie provides some points for discussion. If you get the chance, you might want to take a look at it. ... I'm not a regular poster here, just thought I'd do a "drive-by". The Cuba movie was something different than most peak oil info I've read or seen.
6291. robertjayb - 5/1/2006 4:14:26 PM
Thanks, Trillium,
I'll be looking for the movie. Drive-by again...
6292. alistairConnor - 5/1/2006 4:24:44 PM
Cuba had the advantage of a planned economy and authoritarian government. I don't think it'll be that easy for the rest of us.
6293. Adam Selene - 5/1/2006 5:01:57 PM
The "advantage" of a planned economy? Ok, I know where you're coming from...
6294. Adam Selene - 5/1/2006 5:03:58 PM
The "advantage" of a planned economy? Ok, I know where you're coming from...
6295. alistairConnor - 5/1/2006 5:05:08 PM
In crisis times, a planned economy is an advantage. No question.
What is the opposite of a planned economy? Look at GWB and New Orleans, and multiply by a thousand.
6296. Adam Selene - 5/1/2006 5:11:29 PM
GWB (Dubya, I presume) and New O is hardly unplanned.
K Galrbraith's legacy was on the News Hour tonight. I'll grant him that government's role in the economy can/should be to dampen the peaks and valleys. But that's a far cry from a "planned economy" in the Soviet or Cuban style. Or even a Frenchie style.
6297. alistairconnor - 5/2/2006 2:29:53 AM
GWB and New O are an illustration of Unplanning as an ideology.
With the Cuban example, all ideology aside, I was just pointing out that, in a time of severe crisis, an authoritarian state with centralized economic planning has a whole range of tools that the US will not have when the equivalent energy crunch comes.
6298. wabbit - 5/2/2006 6:53:30 AM
Trillium, thanks for pointing out that documentary. I found a website with more information about it here.
6299. alistairconnor - 5/5/2006 5:29:59 AM
I'm posting this especially for Pelle, who doesn't believe in God, the Devil, Lester Brown or the Club of Rome.
It's just a comment from the Oil Drum, but remarkably cogent and succinct.
Yes, the idea of "The Limits of Growth" was very well known in the '70s and the notion that also oil and gas will deplete was accepted. M. King Hubbert predicted at that time that conventional oil would peak in 2000. He was pretty well at the target, conventional, light oil peaked around that year. Now we speak about non-conventional oil, extra heavy, tar sands etc. These have much lower EROEI than conventional oil. The lower margin EROEI (EROEI of additional production) explains some of the oil price hike (price tell also something about the energy inputs). And we add some "non-oil" (NGL) in the all liquids numbers and count this as oil. This is just forging the statistics.
In fact the predictions of the '70s have been quite realistic. The main error of the authors of "The Limits of Growth" was that they didn't understand the primary role of the energy resources, but treated all natural resources as equally potential constraints of growth. With energy it is possible to substitute one raw material with others and boost food production - but you cannot substitute energy itself. Byt the way, the Club of Rome has developed its World Model all the time, but running it crashes the simulated world just as before... (http://www.clubofrome.org/)
Now, if "everybody knew", why nothing was done? A lot was actually done. There was quite ambitious alternatives reasearch - so we know already a lot. That is why there is not as much interest on that reasearch now as some could expect. There was wide discussion about alternative fuels, but the results were just the same as now: nothing much to gain there.
The Club of Rome and Limits of Growth approach was later discredited by claiming that the expected catastrophe didn't happen. Well, they gave us about 30 years of good time before we would see the impacts of the global resource depletion. So here we are.
6300. PelleNilsson - 5/5/2006 9:40:09 AM
I really think you should read "Limits to Growth" before discussing it, alistair. It is available at the Bibliothéque de Lyon as "Halte à la croissance?". I looked it up for you.
6301. wonkers2 - 5/8/2006 12:22:05 PM
Federal Study Finds Accord on Warming--"clear evidence of human influences on the climate system" Global Warming is Here. Deal with it!
6302. wonkers2 - 5/8/2006 12:24:43 PM
6303. wonkers2 - 5/8/2006 12:38:40 PM
If you are serious about anthropogenic contributions to global warming (and I would say that at least 99.9 percent of scientists and informed citizens who look at the problem are)...then nuclear power has to be a part of the portfolio of future power sources. Fueling Our Future.
[This is the best comprehensive article I've seen on global warming and all future energy sources.]
6304. wonkers2 - 5/8/2006 3:04:14 PM
I'd be interested in hearing from thoughtful or other global warming skeptics after they've read the above-linked articles, especially the one entitled "Fueling Our Future."
6305. wonkers2 - 5/11/2006 6:25:48 AM
Galbraith was right but for the wrong reasons. Therefore, no Nobel Prize.
"Galbraith argued that Americans would lead longer, more fulfilling lives if they spent less on private luxuries and more on their external environments. As he memborably put it:
'The family which takes its mauve and cerise, air-conditioned, power-steered, and power-braked automobile out for a tour passes through cities that are badly paved, made hideous by litter, blighted buildings, billboards, and posts for wires that should long since have been put underground." Galbraith.
6306. wonkers2 - 5/19/2006 6:51:28 AM
Here's a pretty fair summary of the current plight of American auto companies, workers and retirees. Japanese Cars, American Retirees.
6307. alistairconnor - 5/23/2006 6:38:41 AM
This afternoon I'm going to liquidate the meagre few thousand euros I have in a stock fund -- so far I've only lost the gains of the last six months.
Call me a doombat, but I see no reason to believe it'll stop there. The decline is coming from the US, and I expect it'll drag us down quite a bit.
6308. wonkers2 - 5/23/2006 8:37:09 AM
The 64-dollar question is this the beginning of a bear market or just a correction due to the fast run-up in the past few months. Hard to tell.
6309. alistairconnor - 5/23/2006 8:51:59 AM
Depends. One of these days, the rest of the world is going to call America's bluff, and stop believing in the value of the dollars that are being magicked out of nothing to pay the US's debts. This has been going on for a long time, but the end of cheap energy (which will dramatically challenge the American Way of Life) coupled with the disastrous state of US credibility in geostrategic terms, makes this a particularly dangerous moment.
6310. wonkers2 - 5/23/2006 8:56:19 AM
Yeah, we've been living on borrowed time.
6311. wonkers2 - 5/23/2006 9:50:05 AM
6312. alistairconnor - 6/8/2006 3:11:32 AM
A good, solid, common-sense analysis of the oil supply situation from Allan Greenspan. Worth reading entirely (9 pages, double spaced).
He doesn't use scary words like "peak oil", but the implicit message is clear : the price of oil isn't coming down significantly. Ever. Get used to it.
6313. wonkers2 - 6/8/2006 7:32:24 AM
Hyundai leapfrogs Toyota in quality Here.
6314. concerned - 8/19/2006 6:14:29 PM
I became curious as to the etymology of the phrase 'scot free' which always suggested to me skinflint Scots chiseling people out of their rightful belongings. Apparently, that had little to do with the true origin.
As with the word hopscotch, scot free has no connection with Scotsmen, frugal or otherwise. It’s a Scandinavian word meaning “payment”. The expression derives from a medieval municipal tax levied in proportional shares on inhabitants, often for poor relief. This was called a scot, as an abbreviation of the full term scot and lot, where scot was the sum to be paid and lot was one’s allotted share. (This tax lasted a long time, in some places such as Westminster down to the electoral reforms of 1832, with only those paying scot and lot being allowed to vote.) So somebody who avoided paying his share of the town’s expenses for some reason got off scot free. It was also used for a payment or reckoning, especially one’s share of the cost of an entertainment; when one settled up, one “paid for one’s scot”. Again, someone who evaded paying their share of the tab got off scot free. It’s been suggested that this usage may have come from the old habit of noting purchases of drinks and the like by making marks on a slate, or scotching it, but the evidence suggests this is just a popular etymology, and that the usage comes from the same idea of a sum due to be paid.
6315. alistairconnor - 8/24/2006 2:40:30 AM
Ha! I notice (Message # 6307) that French stocks are just about back to the price I sold at, in May.
But I have no regrets... the best is yet to come, people... Don't take my word for it... read about the imminent housing collapse in the US and SELL YOUR STOCKS!
I'm posting this article in extenso (stolen from the Google cache) because it's from a pay site, Barron's Online.
Read the last four paragraphs, do a double take, then read the rest...
6316. alistairconnor - 8/24/2006 2:40:48 AM
Monday, August 21, 2006
The No-Money-Down Disaster
By LON WITTER
A HOUSING CRISIS APPROACHES: According to the Commerce Department's estimates, the national median price of new homes has dropped almost 3% since January. New-home inventories hit a record in April and are only slightly off those all-time highs. Existing-home inventories are 39% higher than they were just one year ago. Meanwhile, sales are down more than 10%.
Although the stocks of new-home builders are down substantially, the stock market and many analysts are ignoring other implications of the housing news. In the latest Barron's Big Money Poll of institutional investors, not a single money manager ranked problems in the housing market among the factors likely to lead to a sharp selloff in stocks in the next 12 months (see "Headed for Dow 12,0001," May 1, 2006). Most experts still predict a 2%-6% rise in housing prices for the year.
These experts and analysts are basing their predictions on a possible increase in wages, inflation and GDP growth. They are overlooking the fact that by any rational valuation there has been no support for the run-up in housing prices since 2001, when the wealth of the middle class was battered by a bear market. Since then, inflation has been low, and wages practically stagnant. Housing prices, on the other hand, are through the roof.
Extrapolating housing prices from their current level based on wages and inflation is like saying a $100 Internet stock with no cash flow and negative earnings will rise as long as it is able to narrow the loss. The analysis ignores the fact that the stock never should have been trading at $100 in the first place.
By any traditional valuation, housing prices at the end of 2005 were 30% to 50% too high. Others have pointed this out, but few have had the nerve to state the obvious: Even if wages and GDP grow, the national median price of housing will probably fall by close to 30% in the next three years. That's simple reversion to the mean.
DOW JONES REPRINTSThis copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit: www.djreprints.com. • See a sample reprint in PDF format • Order a reprint of this article now.
A careful look at the reasons for the rise in housing will give a good indication of the impact this drop will have on the stock market. They include, in chronological order: The collapse of the Internet bubble, which chased hot money out of the stock market; rock-bottom interest rates; 50 years of economic history that suggested housing never goes down, and creative financing.
The first three factors might not be enough to cause a crash, except that together they led to the fourth factor. Irresponsible financing causes bubbles. It causes individuals to buy houses they can't afford. It causes speculation to run wild by lowering the bar to entry. Finally, it leads individuals who bought houses years ago at reasonable prices into the speculative borrowing trap. The home-equity credit line has supported American consumer spending, but at a steep price: Families that tapped into their home equity with creative loans are now in the same trap as those who bought homes they couldn't afford at the top of the market.
The cost and risk of adjustable-rate financing can be devastating. Consider a typical $250,000 three-year adjustable-rate mortgage with a 2% rate-hike cap. If the monthly payment now is $1,123, after the first adjustment, the monthly payment is $1,419. After the second adjustment, the monthly payment is $1,748, a $625-per-month increase. That's $7,500 more per year just to maintain the same mortgage. If you think high gas prices are biting the consumer, consider the cost of mortgage adjustments.
Some more numbers:
• 32.6% of new mortgages and home-equity loans in 2005 were interest only, up from 0.6% in 2000
• 43% of first-time home buyers in 2005 put no money down
• 15.2% of 2005 buyers owe at least 10% more than their home is worth
• 10% of all home owners with mortgages have no equity in their homes
• $2.7 trillion dollars in loans will adjust to higher rates in 2006 and 2007.
These numbers sound preposterous, but the reasoning behind them is worse. Lenders have encouraged people to use the appreciation in value of their houses as collateral for an unaffordable loan, an idea similar to the junk bonds being pushed in the late 1980s. The concept was to use the company you were taking over as collateral for the loan you needed to take over the company in the first place. The implosion of that idea caused the 1989 mini-crash.
Now the house is the bank's collateral for the questionable loan. But what happens if the value of the house starts to drop?
The answer, at least from banks, is already clear: Float the loans. The following figures are from Washington Mutual's annual report: At the end of 2003, 1% of WaMu's option ARMS were in negative amortization (payments were not covering interest charges, so the shortfall was added to principal). At the end of 2004, the percentage jumped to 21%. At the end of 2005, the percentage jumped again to 47%. By value of the loans, the percentage was 55%.
Every month, these borrowers' debt increases; most of them probably don't know it. There is no strict disclosure requirement for negative amortization.
This financial system cannot work; houses are not credit cards. But WaMu's situation is the norm, not the exception. The financial rules encourage lenders to play this aggressive game by allowing them to book negative amortization as earnings. In January-March 2005, WaMu booked $25 million of negative amortization as earnings; in the same period for 2006 the number was $203 million.
Negative amortization and other short-term loans on long-term assets don't work because eventually too many borrowers are unable to pay the loans down -- or unwilling to keep paying for an asset that has declined in value relative to their outstanding balance. Even a relatively brief period of rising mortgage payments, rising debt and falling home values will collapse the system. And when the housing-finance system goes, the rest of the economy will go with it.
By the release of the August housing numbers, it should become clear that the housing market is beginning a significant decline. When this realization hits home, investors will finally have to confront the fact that they are gambling on people who took out no-money-down, interest-only, adjustable-rate mortgages at the top of the market and the financial institutions that made those loans. The stock market should then begin a 25%-30% decline. If the market ignores the warning signs until fall, the decline could occur in a single week.
There are other possibilities: The housing market could strengthen; consumers could shrug off higher loan payments and declining housing values; the financial system may have anticipated a collateral disaster (though with banks holding a record 43% of total assets in direct mortgage loans that seems unlikely); the rest of the world could carry the United States for a change. But these are difficult bets to place. Anyone holding stocks, futures or stock-index funds in this environment is taking a tremendous risk.
What happens after the decline depends on our financial policies. When Japan went through a similar situation in the early 1990s, the right advice was clear: Bite the bullet and get the bad loans off the books. Eventually the Japanese acted, but it took them 15 years of trying everything else first.
If we have the courage to take the right medicine right away, the effect of a market collapse could be very sharp and painful, but relatively short-lived. If, like Japan, we fail to act, the coming decade could be very bleak indeed.
6317. concerned - 8/28/2006 4:31:20 PM
Your excerpt ignores that the US housing market is not monolithic. Most areas of the country have not seen the extreme increases of valuation that have led to half million dollar shacks in California or overpriced condos on the east coast. While it wouldn't surprise me if examples such as these suffer a significant drop in value, that won't hold true for the majority of homes nationwide, and the impact on the stock market will be accordingly mitigated, if it is noticeable at all.
6318. alistairconnor - 8/29/2006 4:20:22 AM
Wanna bet?
6319. alistairconnor - 9/19/2006 4:50:39 AM
We haven't had a world monetary crisis for a while.
Surely there's one coming up.
Turkey?
Hungary?
Pick your favourites...
The rating agency Fitch said it now has five countries on watch for "macro-prudential stress", up from two last year, using a set of indicators. A mixed bag, they comprise Iceland, Azerbaijan, South Africa, Russia and, surprisingly, Ireland, where the ratio of private credit to GDP has reached 190pc, the world's highest. The denouement for Ireland may not be pretty, since it gave up control of monetary policy when it joined the euro.
Which means that we Euro taxpayers will probably have to bail the buggers out. Silver lining : maybe a crash will bring the price of Guinness down.
6320. prolph - 9/22/2006 2:35:12 AM
much of that is true but I am confused. my husband died in 1986 and after the usual year of not moving I decided I needed a smaler house and a larger income, The house I sold had no mortgage and I didnt want one here, Now here is the mystery part,I get three or more calls daily to
offer me a mortgage or help me get a better one. This is tirresome so
I am not kind when the seller offers to hekp me take equity so I ask will I have to pay it back?
How can these creeps make money unless they are trolling for closures?
6321. Magoseph - 9/22/2006 6:10:22 AM
How can these creeps make money unless they are trolling for closures?
I’d presume these people are after a commission they obtain for new business, but who knows really since this business is known for its shady operators.
6322. wonkers2 - 11/25/2006 10:27:06 PM
ECONOMIC THEOLOGY?
A new book by Harvard economist Duncan K. Foley questions what he calls the "economic theology" of Milton Friedman and traditional economists. According to Duncan economics has set itself up as an autonomous discipline which is not always very scientific but which is used to justify moral choices based on free market theory akin to a theology.
One area that comes quickly to mind is comparative advantage theory which is used to justify free trade without regard to evironmental or labor conditions. Increasing numbers of people are questioning the results for America of unalloyed free trade, wondering whether American workers should be expected to give up their jobs, or cut their wages, lose their pensions and health insurance in order to compete with overseas operations of their own employers or their contractors where workers work in unhealthful, unsafe plants that are polluting the environment. Is the value of the cheap goods imported by Wal-Mart actually justify the lost jobs, pensions and health care and lower wages in this country and the long term costs of polluting the world's environment?
Traditional economists usually weigh in against increases in the minimum wage or against having a minimum wage because according to their dogma this will result in increased unemployment. These knee jerk conclusions are based primarily on traditional economic assumptions, not on empirical evidence. Recent research has called the extent of job loss due to increases in the minimum wage into question.
The assumptions of traditional economics are being questioned in other areas as well such as corporate executive compensation. Professors from leading business schools sold the corporate world on the theory that performance would improve if CEO compensation, using stock options, were more closely aligned with the interests of the stockholders. In practice this resulted in widespread cooking of the books and backdating of options with little evidence of increased motivation and better performance by CEOs. Their compensation, relative to that of average workers, in the past 30 years or so has gone up on the order of ten times, from 40X to around 400 times that of the average worker. I've seen no evidence that there's been a corresponding increase in the performance of CEOs or the value of their companies' stock.
Traditional economics relies on the over-simplified theory that money is what motivates people. However social science tells us that human motivation in organizations if complex with many factors coming into play in addition to money. However, in today's companies the sky's the limit for CEO compensation while employees are expected to accept wage cuts and give up their pensions and health care benefits. Maybe it's time to cut economic theology down to size.
"Adam's Fallacy: A Guide to Economic Theology
6323. wabbit - 1/18/2007 9:09:00 AM
Doesn't get much drier than taxes, so here's a 2006 tax tip:
SPECIAL ONE TIME TAX CREDIT ON YOUR 2006 TAX RETURNThis is making the rounds in emails and might be mistaken as more spam, but it's actually true. Even the IRS says so.
When it comes time to prepare and file your 2006 tax return, make sure you don't overlook the "federal excise tax refund credit." You claim the credit online 71 of your form 1040. A similar line will be available if you file the short form 1040A. If you have family or friends who no longer file a tax return AND they have their own land phone in their home and have been paying a phone bill for years, make sure they know about this form1040EZ-T.
What is this all about? Well the federal excise tax has been charged to you on your phone bill for years. It is an old tax that was assessed on your toll calls based on how far the call was being made and how much time you talked on that call. When phone companies began to offer flat fee phone service, challenges to the excise tax ended up in federal courts in several districts of the country. The challenges pointed out that flat fee/rate phone service had nothing to do with the distance and the length of the phone call. Therefore, the excise tax should/could not be assessed.
The IRS has now conceded this argument. Phone companies have been given notice to stop assessing the federal excise tax as ofAug 30, 2006. You will most likely see the tax on your September cutoff statement, but it should NOT be on your October bill.
But the challengers of the old law also demanded restitution. So the IRS has announced that a one time credit will be available when you and I file our 2006 tax return as I explained above. However, the IRS also established limits on how BIG a credit you can get. Here's how it works.
If you file your return as a single person with just you as a dependent, you get to claim a $30 credit online 71 of your 1040.
If you file with a child or a parent as your dependent, you claim $40.
If you file your return as a married couple with no children, you claim $40.
If you file as married with children, you claim $50 if one child, $60 if two children.
In all cases, the most you get to claim is $60 - UNLESS you have all your phone bills starting AFTERFeb 28, 2003 throughJuly 31, 2006 (do not use any bills startingAug 1, 2006.), then you can add up the ACTUAL TAX AS IT APPEARS ON YOUR BILLS AND CLAIM THAT FOR A CREDIT.
Now if you have your actual phone bills and come up with an ACTUAL TAX AMOUNT, you cannot useline 71 on your tax return. You have to complete a special form number 8913 and attach it to your tax return.
Individuals using the special from 1040EZ-T will have to attach this form 8913 also.
One final point - this credit is a refundable credit. That means you get this money, no matter how your tax return works out. If you would end up owing the IRS a balance, the refund will reduce that balance you owe. If you end up getting a refund, the credit will be added and you get a bigger refund by that $30 to $60, depending on how many dependents are on your return.
6324. wonkers2 - 1/18/2007 10:55:36 AM
Thanks!
6325. wonkers2 - 2/3/2007 4:17:50 PM
Who was Milton Friedman? by Paul Krugman For anyone interested in Milton Friedman or the current state of economic theory this article is worth reading.
6326. alistairconnor - 2/28/2007 7:18:50 AM
My Message # 6307 is looking pretty silly... I have foregone a 10% gain by bailing last May... I think I was right too soon.
Likewise on US housing : Message # 6316 is looking prophetic, with shady mortgage lenders imploding.
Today, Asian stock markets are falling based on perceived weakness of the US economy. Is this the start of a meltdown?
6327. alistairConnor - 3/4/2007 5:05:23 AM
In other news :
I've been following "peak oil" news for about a year. The question of when global production of crude oil peaks is an interesting one, from the point of view of economics and geopolitics, and also with respect to one's own choices.
Some specialists contend that the peak is already behind us, and that we're in a plateau period, with overall decline to start shortly, or in a couple of years. Many others predict a peak in about 2012.
I've wavered on this. New production is coming on line, but not on a big enough scale to replace the ageing giants if they are past their peak. The key is whether the Saudis have peaked or not. They claim that they are withholding production to stabilise the market... that their recent reductions in output are voluntary.
But their major field, Ghawar, is not only the world's biggest, it's been in production for about 70 years. In recent decades they have introduced very sophisticated technology to pump out the oil as fast as possible. This means that when the end comes, the decline of its production is likely to be precipitous... as we can see with Mexico's giant field, which is currently crashing.
A recent post on peak-oil blog The Oil Drum has convinced me that Saudi Arabia has passed its peak... that Ghawar is watering out.
What we are seeing in this graph is Saudi production, estimated by different industry sources, for the past 12 months. The straight lines are a linear interpolation, indicating a decline rate of 8%.
But wait, after all, perhaps they have just been throttling back the pumps, as they claim, to support world prices?
Not impossible. But the clincher, for me, is the bump in production in mid 2006. This happens to coincide with a new project (Haradh) coming on line. i.e. production rates are consistent with the idea that they are pumping as fast as they can, and immediately threw this new production into the mix as soon as it was available. 
If this analysis is right, then they will probably be able to keep up the pretense until this summer... prices will probably go up and down before then... then the truth will out, because the next supply crunch will come mid-year.
Con, it looks to me like I'll be collecting on our little bet...
I only wish we had specified "the value of a barrel of oil" rather than $100... because we'll be there before the year is out.
6328. alistairconnor - 3/5/2007 12:35:16 PM
relating to that bet :
World production of oil in 2006 was dead flat with respect to 2005.
With EIA data to the end of 2006 now available, here are the key figures and comparison to 2005:
Crude Oil and Condensate: 73.5 Mb/d (down 0.2)
Natural Gas Liquids (NGLs): 7.9 Mb/d (up 0.14)
Other Liquids: 3.3 Mb/d (up 0.08)
Total Liquids: 84.6 Mb/d (up an insignificant 0.02)
With world demand, and world prices, at historic highs, it's sort of odd that world production hasn't increased at all.
... unless there's some sort of... ...shortage? Heaven forbid.
My bet with Concerned specifies that 2005 or 2006 would be the historical peak for world oil production (because I wasn't sure which would be higher). It also specified that we would use BP's numbers, which aren't out yet. In any case, it'll be another year before we can usefully review the bet :
* either 2007 production will be higher than 2005/2006, in which case I will pay out
* or it will be lower. In which case Con will have the option of paying up, or... doubling down?
6329. alistairconnor - 3/5/2007 12:37:36 PM
Source for those numbers, and a succinct analysis of the prospects for 2007 : Energy bulletin
6330. wonkers2 - 3/7/2007 6:08:11 PM
Not All Sources Are Equal by Anthony Lewis
6331. concerned - 3/7/2007 6:30:47 PM
Re. 6328 -
Looks like a horse(power) race.
6332. alistairconnor - 3/8/2007 11:45:44 AM
In the same vein :
Tom Whipple : The Apocalypse as a four-horse race
Last week I discussed how the great crisis could be thought of as four interrelated sub crises: peak oil production, peak oil exports, climate change, and economic decline. Each of these will have an impact on the others and the order in which they arrive and interact with each other is likely to have a lot to do with our lifestyles in decades to come.
Until last week, a good guess would have been that shortages in oil available for export would impact us first. This would be followed by economic decline, peak oil production, and finally a meaningful reduction in the burning of fossil fuel in response to global warming. News from the last few weeks, however, makes it look like more of a horse race.
6333. alistairconnor - 3/30/2007 4:19:37 AM
Arbitrage forensics!
Oil futures prices for 2012 delivery are going up just as fast as the spot price (around $66 today...)
From which it can be inferred that the Saudis are bullshitting us about their future production capacity.
When there are short-term, supply-driven increases in the spot price of oil—such as the recent increase that can be partially attributed to the capture of British sailors by Iran (see chart below)—this price increase should not also increase the price of a future nearly four years out. And yet it did…the price of the December 2012 contract increased right alongside the spot price over the past few days. Why???
[...]
If the future price of oil were significantly below the arbitrage price cap, then this would be highly significant to the Peak Oil debate—it would represent the market intentions of major producers who, with full access to their internal data, believed that the future price would not be significantly higher than the present price. Conversely, because there appears to be zero space available under the arbitrage cap—even when events temporarily increase the spot price—we can discern that these major producrs believe that the future price will be significantly higher. In reality, this calculus applies primarily to only one producer—as Saudi Arabia is the worlds largest exporter, and as most future hopes for oil supply increase seem predicated on their claims, then they are the only market player whose future production has a high likelihood of setting future prices.
If Saudi ARAMCO actually believed that it would be producing 12+ million barrels of oil a day in 2012, and that prices would still be trading in a band of roughly $60/barrel, then it would have significant motivation to sell oil futures for delivery in 2012. Why? If it can get $68 today for oil to be delivered in 2012, and it honestly expects oil to be trading in the $60s in 2010, it would be crazy not to sell the future today and invest the money in a bond or other financial instrument. Even at a 3% rate of return above inflation, selling a Dec. 2012 contract today for $68/barrel is the same as selling that same oil in Dec. 2010 for $81/barrel (in 2007 dollars). If Saudi ARAMCO did believe what it publicly states it believes, then it would be happy to sell oil for delivery in 2012 at $68/barrel (today’s future price). Or at $67/barrel. Or at $66/barrel—this motivation to sell even at prices below where the future is currently trading would bring the future price down—it wouldn’t jump to fill space created under that arbitrage cap by short-term influences. Because this is not what is happening—in fact, because the opposite is happening and future prices rise immediately to fill any available room under the arbitrage cap—we gain a very valuable insight into the inner thinking of the Saudis. What insight? Because the future price jumps to fill space created under the arbitrage cap, we can infer with high confidence that the Saudis don’t believe their own rhetoric. They don’t believe that they’ll actually be producing 12+ million barrels of oil per day in 2010, they don’t believe that the price of oil will be less than $80 in 2010.
6334. ElliottRW - 4/10/2007 8:31:53 PM
7033406
6335. arkymalarky - 4/10/2007 8:58:47 PM
Hey Elliott!
6336. ElliottRW - 4/15/2007 8:00:38 AM
Hi Arky!
6337. alistairConnor - 4/15/2007 9:48:29 AM
I get the feeling that this thread is being used as some sort of drop-off point... Drug deal? International espionage?
6338. wonkers2 - 4/15/2007 11:18:39 AM
Hi Elliott!
6339. ElliottRW - 4/16/2007 7:01:10 PM
7033406
Ok, it's a patent. I was playing a little game, seeing if someone would guess what I was talking about.
Is it for real? If it is, it is fantastic. Really, it seems too good to be true. Thought it would be a good "slow thread" topic.
6340. alistairconnor - 4/17/2007 3:31:25 AM
Yeah!Yeah! the EEStor barium titanate battery!
I'm sure I've mentioned it somwhere up thread.
It is absolutely on the button of my hot topics : global warming and peak oil. Thank you.
52 KwH, about 150 kg... that is what I want to power my next car. Key questions : how much does it cost to build one, and can they scale up production to tens of millions in a couple of years?
The future of Civilisation As We Know It depends on the answer...
Latest info I can find (they are being very secretive) is from January.
They claim production costs equivalent to lead-acid batteries, for ten times the energy density. Up to 1.5 to 2.5 times the energy of Li-Ion batteries at 12 to 25% of the cost. Ultra-quick charging, which you can't do with lead-acid or Li-Ion.
The battery, or ultracapacitor, will not degrade due to being fully discharged or recharged, and also can be rapidly charged without damaging the material or reducing its life. The cycle time to fully charge a 52 kWh EESU would be in the range of 4 to 6 minutes with sufficient cooling of the power cables and connections.
I can see two modes of charging, for the average car : overnight plug-in (need a pretty hefty power supply, of the order of 5 Kw or so, for a 10 hour charge), and service stations. Attendants hook up very thick cables and charge your car in a few minutes (no self service, because the currents involved are huge).
6341. alistairconnor - 4/17/2007 3:36:13 AM
A major reason to be optimistic about this technology (bearing in mind that interests in the oil and automotive industries have severely restricted the applications of Li-Ion batteries in vehicles through clever patent restrictions) : (comment from the GreenCarCongress link above)
Kleiner Perkins Caufield & Beyers are the major investors, at the moment, in EEStor. For those who don't know, they are among the largest and most successful venture capital firms in the world. Their portfolio includes Amazon, Sun, Genetech, Verisign, and GOOGLE, among others.
Why do I mention this? Because for once, important EV technology IS NOT IN THE HANDS OF BIG OIL.
6342. ElliottRW - 4/18/2007 9:48:25 AM
I don't really want to rehash an old topic. I guess we should wait until there is something new to talk about.
6343. alistairConnor - 4/18/2007 3:01:39 PM
Hey it's always good to rehash this stuff. And there is always something new to talk about. In recent months, "peak oil" has been mostly in this thread, "global warming" mostly in the science thread.
I have become addicted to the Oil Drum, the leading peak-oil discussion site.
6344. alistairconnor - 4/19/2007 7:57:42 AM
Oh well, here's progress, of a sort... Fair and balanced headline on Foxnews: Peak Oil Will Be Reached by 2018
That of course is rather optimistic, but in the ballpark.
6345. concerned - 4/19/2007 8:05:56 AM
Re. 6344 -
AC...citing Fox News....? The mind boggles.
But, this just goes to show that, one way or another, the world will become 'greener' whether by government fiat or market forces. I prefer the latter, of course.
6346. alistairconnor - 4/19/2007 8:08:58 AM
Ahhh... Just burn the oil like there's no tomorrow
Then burn the coal like it's going out of fashion.
Then check to see if we've got a planet left.
Sounds like a plan to me.
6347. alistairconnor - 4/19/2007 8:12:42 AM
The problem of "market forces" is that nobody is paying the atmosphere for all the carbon we're dumping in it.
Your "market forces" put an end to the Roman Empire, and the Incas, among others. Just keep on increasing and eating up your resource base until you come to the end of it, then collapse.
That's not market forces, that's Darwinism.
6348. concerned - 4/19/2007 8:20:18 AM
Well, you're going to have to figure out some way to put the arm on the Chinese, because they're coal crazy.
6349. concerned - 4/19/2007 8:25:33 AM
AC -
Wrt oil, whether production peaks five years from now or a decade from now, it's all going to be allocated and used with little delay. I don't really see much variation in that scenario for at least a few decades, no matter what international legislation is passed.
6350. concerned - 4/19/2007 8:27:08 AM
Even if global warming treaty signatories deny themselves the use of some of that oil, it will be gobbled up posthaste by developing countries.
6351. concerned - 4/19/2007 8:28:13 AM
Then their economies will develop even faster along with an insatiable need for yet more carbon based fuels.
6352. concerned - 4/25/2007 1:59:01 PM
From the internet:
Because it is tax season. . . Let's put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Because you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
"I only got a dollar out of the $20,"declared the sixth man. He pointed To the tenth man," but he got $10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!"
"That's true!!" shouted the seventh man. "Why should he get $10 back When I got only two? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
6353. concerned - 4/25/2007 1:59:05 PM
From the internet:
Because it is tax season. . . Let's put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Because you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20."Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
"I only got a dollar out of the $20,"declared the sixth man. He pointed To the tenth man," but he got $10!"
"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got ten times more than I!"
"That's true!!" shouted the seventh man. "Why should he get $10 back When I got only two? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
6354. thoughtful - 4/26/2007 2:47:28 PM
This is just the coolest look at the housing situation...
Real Estate Roller Coaster
6355. alistairconnor - 5/9/2007 11:01:13 AM
I continue to be amazed at the sophistication of modern financial engineering.
The consequences of the current slow implosion of the US housing market are going to be spread around quite widely : globalisation is a wonderful thing.
For example, the sharp drop in US housing starts has not resulted in a corresponding rise in unemployment numbers; however, the remittances of Latin American immigrant workers to their home countries have plummeted, and may have grave consequences back home.
Another example : Here's a succinct description of the origins and consequences of the collapse of "sub-prime" housing debt :
One year after the collapse of the US stock market in 2000, the NASDAQ dropped 80% and the US government feared a deflationary depression—a no money no demand depression like the 1930s—could happen.
So in 2001 the US government took quick and decisive action—in retrospect stupid and short-sighted—and flooded the US with money to prevent a depression from developing; but, in the process they created a real estate bubble and, as the bubble deflates, those who can’t pay their bills, aren’t.
Banks aren’t in business to loan money to those who can’t repay them and they knew that customers who “took advantage” of subprime mortgages were at high risk of default. So the banks sold their subprime loans.
Now, who would buy a “subprime”, e.g. substandard, loan? Who would buy a subprime steak, a subprime car, a subprime house, a subprime dating service? This is where the genius of Wall Street came into play.
To sell these soon-to-explode debt bombs, Wall Street cleverly bundled them with higher rated AAA debt and gave them a new name, CDOs, collateralized debt obligations, and sold trillions of dollars of 30% subprime but AAA rated CDOs to unsuspecting buyers.
Even if you don’t know what a CDO is, CDO sounds a lot better than subprime or substandard. That was the genius of Wall Street. It was a way for Wall Street to sell shaky debt before the fenders fell off. And it worked, at least for Wall Street.
These debt bombs are now embedded far across the global financial landscape, the majority bought by European and Asian investors and institutions seeking downstream revenues; but instead of downstream revenues, they will be absorbing unexpected and significant losses.
Fully 50% of the 2006 earning of HSBC, The Hong Kong Shanghai Banking Corporation, the world’s third largest bank, were wiped out by the subprime losses of its US subsidiary. AXA, a French insurance company and CommerzBank, a German Financial Services company were also major buyers of Wall Street’s subprime AAA rated debt and will suffer the consequences for so doing.
[...]
Globalization has been a wealth builder, perhaps unequally so, but nonetheless wealth has been created. Soon, however, another darker side of globalization is about to manifest. Risk as well as money move quickly across global highways recently built and made possible by a one world financial marketplace, and that risk is now about to become apparent.
Global currency flows move swiftly and quickly and turn on a dime. The Asian liquidity crisis of 1997 was a recent manifestation of this phenomena; the next crisis will be the US. The subprime losses suffered by the buying of America’s bad debts may be the final straw in the diversion of foreign moneys away from America.
By selling foreign investors its bad debt, America has shot itself in the foot. Because America is now the world’s #1 debtor, because America needs over $1 trillion in foreign investment capital each year to pay its bills—and because it was foreign investors that were primarily burned by Wall Street’s subprime CDOs, the flow of foreign capital to the US may soon be going elsewhere.
6356. concerned - 5/9/2007 11:25:09 AM
The author does not make any connection between the actions of the US government in 2001 and the recent popularity of subprime loans which are purely a private sector phenomenon.
6357. alistairConnor - 5/9/2007 3:03:20 PM
He mentions flooding the US with money. Easy credit leads to bad credit, it's mechanical.
6358. wonkers2 - 5/9/2007 6:15:37 PM
Here's a thought-provoking articleThe Mystery of Wisdom
6359. concerned - 5/9/2007 9:57:44 PM
Re. 6357 -
In actuality, you're commenting on Federal Reserve monetary policy. In 2000 (during the Xlowntoon administration, mind) the NASDAQ began its famous crash, eventually dropping to close to 2000 from a peak of 5000. The DJIA also declined during this time period. To avoid a recession, the Federal Reserve under Alan Greenspan reduced the discount rate substantially, avoiding a recession. An ancillary effect is that the resulting long term reduction in mortgage rates encouraged irresponsible financing by certain subprime lenders.
There is room for criticism in the above, but it is a markedly better result than that in Japan throughout the '90's when no monetary policy could avoid actual depreciation on top of recession. Interestingly enough, the propensity of the Japanese to save rather than spend, worsened the economic situation overall during the '90's.
The US still has the undeniable advantage over any other potential superpower of stability of government. This is something that China won't have a chance to overcome for decades, no matter what happens.
6360. concerned - 5/9/2007 10:26:20 PM
It was less than forty years ago that Mao was starving millions of Chinese to death, and China is today in the process of denying Tibetians their native rights, as well as their majority status. These are policies that the US government was never guilty of at any time during the last 100 plus years.
Give the Chinese government 150 years of good behavior, and then maybe it might be time to reconsider. But not until then.
6361. concerned - 5/9/2007 10:27:29 PM
And the Chinese pollution.
Yecch.
6362. concerned - 5/9/2007 10:30:08 PM
Btw, the US government never was reponsible for starving millions to death at any time during its existence. Not by about three orders of magnitude (a thousandth), as a matter of fact.
6363. alistairConnor - 5/9/2007 11:57:25 PM
There is room for criticism in the above, but it is a markedly better result than that in Japan throughout the '90's when no monetary policy could avoid actual depreciation on top of recession.
Well, the Japanese took their medecine in the 90s, and came out of it with a sound economy, in contrast to the USA.
6364. concerned - 5/10/2007 8:36:56 AM
Why do you draw that untrue comparison? The Japanese did not have a choice, and still suffer from some of the same structural problems as they did prior to their extended recession which was exceeded in the US only by the great depression seventy years ago.
6365. alistairConnor - 5/10/2007 1:05:33 PM
Well, you were the one who introduced the comparison. And it's quite absurd to compare the mild Japanese recession of the 90s with the Great Depression. Absolutely not in the ballpark. But the main point is that the Japanese look to be in much better shape economically to face the next couple of decades than the US.
6366. concerned - 5/10/2007 2:04:10 PM
Why do you believe that? Japan is suffering much more from the aging of its population than the US is. Japan also has few natural resources and little arable land both absolutely and relative to its population compared to the US. And I wouldn't call a recession 'mild' that, among other things, lasted a full decade.
The Nikkei stock market index fell more than 60 percent—from a high of 40,000 at the end of 1989 to under 15,000 by 1992. It rose somewhat during the mid-1990s on hopes that the economy would soon recover, but as the economic outlook continued to worsen, share prices again fell. The Nikkei fell below 12,000 by March 2001. Real estate prices also plummeted during the recession—by 80 percent from 1991 to 1998 (Herbener 1999).
Mild, my ass.
6367. concerned - 5/10/2007 2:07:14 PM
And here you are whining about a relative handful of subprime loan defaults. You'd be screaming 'Armageddon' if what happened to the Japanese real estate market ever happened in the US.
But nothing remotely like that will happen. Because of the US's much greater economic stability. QED.
6368. concerned - 5/10/2007 8:54:42 PM
I predict that the US will continue to defy the doomsayer's economic predictions for some time to come, barring a Smoot-Hawleyesque descent into a global recession.
This will be bolstered by the support of nations whose governments are percipient enough not to effectively endorse the destructive tendencies of the precepts of seventh century flat earth religions, through stupidity, ignorance, nihilism or mere insanity.
6369. concerned - 5/10/2007 9:01:02 PM
So, AC, you can support the US and Western Civilization meterially and by opinion, or you can descend by default into the filth, ignorance and insanity of Islamic ascendancy.
6370. concerned - 5/10/2007 9:04:06 PM
Given that Lefties profess to think the Inquisition of old so detestable, why are they succumbing without a protest to its modern equivalent? Such are worthless.
6371. concerned - 5/10/2007 9:05:40 PM
Jersey Jihad.
6372. concerned - 5/10/2007 9:13:39 PM
LW moral relativism=total copout when faced with real religious fundamentalism, AC.
6373. concerned - 5/10/2007 9:15:52 PM
Remember that the RW in the US has little relationship to the European conception of its RW, since the US has no monarchical background.
6374. concerned - 5/10/2007 9:35:45 PM
A corollary of that is that the International Left (which includes the US Left) is opposing what does not exist in large part in the US Right.
6375. concerned - 5/10/2007 9:42:34 PM
For example, the sharp drop in US housing starts has not resulted in a corresponding rise in unemployment numbers; however, the remittances of Latin American immigrant workers to their home countries have plummeted, and may have grave consequences back home.
The above statement is an excellent example of the soft racism of the LW. Japan is as ethnically different in the aggregate as one could desire from the average US population, yet they do at least as well per capita as in the US, but with less resources than Mexico.
Gimme a break.
6376. concerned - 5/10/2007 9:48:02 PM
What am I saying? In part, that some ideas are more important than 'it's all about me'.
6377. concerned - 5/10/2007 10:07:53 PM
But not certain stupid ideas completely antiethical to societal well being from flat earth religions.
6378. prolph - 6/12/2007 1:05:58 AM
concerned-what ARE you reading?
6379. alistairconnor - 6/12/2007 2:36:31 AM
It's not what he's READING that worries me!
6380. alistairconnor - 6/19/2007 5:48:07 AM
2001 74932
2002 74496 -0,58%
2003 77056 3,44%
2004 80244 4,14%
2005 81250 1,25%
2006 81663 0,51%
6381. thoughtful - 6/19/2007 3:29:38 PM
Thanks AC....i'm making good use of that data
6382. alistairconnor - 6/22/2007 4:51:07 AM
Here's an excellent article about the paradigm shift going on in oil production
There has been a paradigm shift in the energy world whereby oil producers are no longer inclined to rapidly exhaust their resource for the sake of accelerating the misuse of a precious and finite commodity. This sentiment prevails inside and outside of OPEC countries but has yet to be appreciated among the major energy consuming countries of the world.
6383. thoughtful - 7/5/2007 12:33:30 PM
Keep your eye on the slow motion disaster in progress that relates to CDO (collateralized debt obligations), the housing market collapse, and extraordinary amounts of leverage off of these accounts. Just like the titanic whose fate was determined long before it encountered the iceberg, this market is going through a wringer, the likes of which we've not seen before. No one knows how it will turn out or how many survivors there might be, but it has all the makings of an enron type collapse on steroids...making LTCM look like, dare I say, a mote in the eye.
See for example.
6384. Ms. No - 7/5/2007 12:50:05 PM
What exactly did that article mean in non-economist? I couldn't really make heads or tails of it other than that it's some kind of warning because CDO's have only been valued by artificial and theoretical means. That sounds unwise to me just on principle --- a kind of counting chickens before you're sure you've even got a basket of eggs --- but I don't know what the danger is specifically or what one might do to protect against personal losses.
6385. alistairConnor - 8/3/2007 5:22:06 PM
erm... looks like insider gibberish to me too. I have a sneaky feeling that this whole class of parasites who get rich off derivatives of derivatives of derivatives, are going to get a nasty bruising.
But that's probably just wishful thinking, chase-the-moneylenders-out-of-the-temple style.
With respect to the housing market implosion and its snowballing effects, try Message # 6316 this, that I posted nearly a year ago.
6386. wonkers2 - 8/5/2007 12:04:53 PM
Anybody worried about the stock market?
6387. alistairConnor - 8/20/2007 12:38:49 PM
I had some money that I needed to move from New Zealand to France. Asked my partner to hurry it up because I had a bad feeling about the $NZ ... and sure enough... 
Transfer came through on the 16th. That's the low point on the graph so far. Just before the bounce.
Story of my life!
6388. thoughtful - 8/21/2007 6:28:20 AM
Re #6383, don't say I didn't warn you...gave you a month heads up before the markets seized..
6389. alistairconnor - 10/26/2007 5:05:35 AM
Speaking of don't-say-I-didn't-warn you...
Q4 2007 : Demand > Supply. The first Oil Crunch?
Oil hits record above $90 on OPEC report
Forget the usual excuses about speculation and war fright... this article gives the fundamentals quite succinctly.
OPEC, anticipating increased demand this quarter, announced a half a million barrels per day for November, only they seem to be having trouble actually delivering on this promise.
Now they announce that there are no further discussions in progress about future increases.
Remember, the Saudis are alleged to have a couple of million barrels spare capacity, that they can turn on and off when they like. They have often done so in the past, and have done a pretty fair job in stabilising oil prices over the past couple of years.
So, with oil at $92 today, what's going on? Why don't they open the taps?
EITHER the Saudis are happy to see $100 oil, as the rest of OPEC seem to be.
OR the Saudis have passed their production peak and have nothing much in the way of spare capacity.
OR some combination of the two : The Saudis are trying to find an equilibrium price that will throttle back world demand for oil, without crashing the world economy, thus maximising their long-term revenues, in the context of a plateau, or extended peak, of world oil production.
6390. wonkers2 - 10/26/2007 10:33:28 AM
Time to open the spiggot!
6391. alistairConnor - 11/11/2007 5:36:03 AM
Old Mother Hubbard just announced that the cupboard is bare...
No bone for Wonk!
The oil majors are starting to talk realistically about the future of oil production. The routine mainstream forecasts, for example the International Energy Agency's prediction of 116 million barrels per day for 2030, are now acknowledged to be pipe dreams.
The CEO of Total now believes that even 100m barrels a day is optimistic.
ConocoPhillips (COP) Chief Executive James Mulva agrees with this analysis, and BP Chief Executive Tony Hayward acknowledges that "about half the oil is gone"...
Mr de Margerie said the problem was not with the amount of oil in the ground. “Reserves have never been so big,” he said, partly because advances in technology had made more sources of oil accessible.
Instead, the constraints were the industry’s ability to produce the oil quickly enough and oil-rich countries’ willingness or ability to develop their reserves.
“We have been, all of us, too optimistic about the geology. Not in terms of reserves, but in terms of how to develop those reserves: how much time it takes, how much realistically do you need.”
He said the industry had also “misunderstood” that resource-rich countries would want to preserve some of their best oil fields for the future, while offering smaller and more difficult fields to foreign investors.
For the short term, this doesn't tell us whether or not the Saudis have spare capacity as they claim... but it gives us clues as to whether they are inclined to open the spiggot or not.
6392. alistairConnor - 11/11/2007 5:45:24 AM
On the same theme : the chief economist of the International Energy Agency is singing from the same hymn book: Our energy system’s wheels may fall off.
On the energy security, oil prices part, the numbers, one doesn’t need to be a big energy expert or anything: it’s just mathematics. I can tell you that we, in the next seven to eight years, need to bring about 37.5 million barrels per day of oil into the markets, for two reasons. One, the increase in the demand, about one third of it, and two thirds, there is a decline in the existing fields [and there is a need] to compensate for the decline. What we have done is that we have looked at all the projects in the Opec countries and the non-Opec countries, all the producing countries of the world, at the 230 oil projects, on a field by field basis, how much oil they will bring to the markets for the next five to seven years. And these are projects which are financially sanctioned projects. If they all see the light of the day in a timely manner, they will come up about 25 million barrels per day. So, 37.5 mlillion on the one hand, what is needed, and what we expect is 25 million barrels per day, and this is in the case of no slippages, no delays in the projects, and everything goes on time, which is very rare. So, there is a gap of 13.5 million barrels per day.
What he is talking about is a long plateau of oil production : in the next seven to eight years, new fields will, more or less, make up for declining production from existing fields.
This is the current state of affairs : it started in 2005, when I started telling you lucky people about peak oil... Now it's pretty much the conventional wisdom.
I expect it will take a couple more years to sink in for the general public. Much like global warming.
6393. alistairconnor - 11/16/2007 9:11:10 AM
Looks like I'll be losing my bet with Con after all...
Though it's increasingly clear that world crude oil production has peaked, in 2005 in fact... 
... it's now clear that the increase in "unconventional" stuff (natural gas liquids, Canadian tar sand products) has increased a lot, and "total liquids" for 2007 looks like being higher than 2006. 
However, these numbers may be wrong, so let's wait and see... also, since our bet specifies BP data, which will be availailable about next June, I certainly won't be paying up just yet... $100 will be substantially cheaper by then, I should think...
6394. alistairconnor - 11/20/2007 11:23:05 AM
Well, well, well... Peak oil just officially went mainstream.
The Wall Street Journal, front page :
A growing number of oil-industry chieftains are endorsing an idea long deemed fringe: The world is approaching a practical limit to the number of barrels of crude oil that can be pumped every day.
Some predict that, despite the world's fast-growing thirst for oil, producers could hit that ceiling as soon as 2012. This rough limit -- which two senior industry officials recently pegged at about 100 million barrels a day -- is well short of global demand projections over the next few decades. Current production is about 85 million barrels a day.
Anybody want to bet with me that oil production will reach 100 million barrels a day ? Pleeease?
6395. alistairconnor - 11/20/2007 11:28:17 AM
Oops... the last line is not from the WSJ... it's me, wanting to recoup my probable losses on the peak date.
6396. wonkers2 - 11/22/2007 7:17:15 AM
Now, we have to start worrying about peak water as well as peak oil.
6397. alistairconnor - 11/22/2007 10:30:58 AM
Peak oil : You've read it all before, but now Time magazine says so too
6398. wonkers2 - 11/22/2007 7:17:43 PM
Supercapitalism, Is that all there is?
6399. alistairconnor - 3/17/2008 11:47:38 AM
If you folks are relying on stocks for your retirement....
... cash them in for gold bars. Or Euros. Or yuan. Or something.
WSJ : margin call on the US economy
6400. thoughtful - 3/17/2008 12:19:49 PM
I have not been this pessimistic about the outlook since....
since...
since...ever.
It is too easy to paint a picture like 10 yrs of stagnation in Japan or a 1930s redux...esp with w in office doing absolutely nothing to stem the blood loss. Whoever gets elected is only going to have an even bigger mess to clean up.
What a freakin' disaster.
6401. alistairconnor - 5/29/2008 10:32:53 AM
WSJ again. File under "if you didn't believe me last year, maybe you'll believe the WSJ now"...
Oil Exporters Are Unable To Keep Up With Demand. Domestic Needs,
Sluggish Investment Crimp Shipments
The world’s top oil producers are proving unable to put more barrels on thirsty world markets despite sky-high prices, a shift that defies traditional market logic and looks set to continue.
Fresh data from the U.S. Department of Energy show the amount of petroleum products shipped by the world’s top oil exporters fell 2.5% last year, despite a 57% increase in prices, a trend that appears to be holding true this year as well. 
Some people call it "peak oil". But shhh... that's some freakish doom cult.
6402. alistairConnor - 6/8/2008 4:48:56 PM
Anglo disease
One of the more interesting things about this Friday's economic news was the very obvious connection between the unemployment number and oil prices. What links the two is debt, the defining feature of what I have called the Anglo Disease, ie the highly unequal economy whereby the rich and the financial sector (almost the same thing these days) capture most of the income but hide it by providing cheap debt to the middle classes so that they can continue to spend.
6403. wonkers2 - 6/9/2008 7:55:56 AM
True.
6404. thoughtful - 6/9/2008 2:32:14 PM
This is unbelievable...only in California.
Buy one house, get one free!
http://link.brightcove.com/services/link/bcpid1079049304/bctid1577987862http://link.brightcove.com/services/link/bcpid1079049304/bctid1577987862
6405. thoughtful - 6/9/2008 2:32:51 PM
Oops sorry the link blew the margins.
I don't know how to link it as an embedded video..
my bad.
6406. alistairConnor - 6/9/2008 3:01:30 PM
Here, my dear.
6407. thoughtful - 6/9/2008 3:18:02 PM
thanks ac...tell me how...
6408. wonkers2 - 6/27/2008 9:11:45 PM
No wonder the stock market went down nearly 4% in two days!
6409. thoughtful - 6/28/2008 11:35:57 AM
Nope...the stock market went down on earnings announcements (or the lack thereof) and oil prices.
The housing thing has been and will continue to go on for months. We still have about 11 months overhang on existing homes and these don't get worked off quickly.
See my post #6400 above from march...
6410. wonkers2 - 6/28/2008 10:23:57 PM
The speakers at the Demos colloquium believe that the mortgage/housing crisis will go on much longer than 11 months--they say years, not months. Unemployment is causing more foreclosures and the housing crisis is contributing to unemployment. The mortgage crisis is responsible for the poor earnings reports and near bankruptcies of major banks, in the U.S. and Europe. It is definitely one factor, if not the major factor in the market decline. Others, as you point out are oil prices and poor earnings reports and rumors of bankruptcy at Chrysler and GM. Also the Bush deficits and national debt aren't helping. Also, the FED's has shot its wad and is expected to be raising the discount rate. Nobody knows for sure how much further house prices will fall. Foreclosures are still increasing. The subprime crisis is affecting pension funds and municipal finances. Additional shoes continue to drop every week. The speakers at the all believe that the government should be doing a lot more than it has done or even proposed to date. The overhang won't get worked off quickly.
6411. wonkers2 - 6/29/2008 6:47:00 AM
Front page story in Sunday NYT on growing mortgage defaults
6412. wonkers2 - 6/30/2008 7:12:36 AM
NYT: Falling Prices Grip Major Stock Markets Around the World Carter Daugherty 6-30-08
The declines at major stock markets worldwide suggest that the same economic concerns are in play: rising inflation, which has been caused for the most part by record oil prices...And central banks around the world, including the United States, are indeed moving to head off resurgent inflation by raising interest rates. While such a move can contain inflation, it can also squelch growth. Indeed, the likelihood of higher interest rates has already been fueling the market sell-offs as investors around the world try to digest all manner of bad economic news...
The absence of a unified strategy for calming inflation has not been lost on investors who are searching for an anchor of stability and coming up short....
Oil prices, while an enormous factor in the decision-making that will go on this week in Europe, are only part of the calculation. A more generalized inflation, feeding through to consumer prices and influencing demands for higher paychecks, also deprives businesses of the confidence that they had until recently about how to make decisions on building factories, hiring employees or developing products...
Stock market volatility caused by inflation has also complicated the pressing task of recapitalizing banking systems, above all in the U.S. but also in Europe.
As equity markets crumble, much-needed recapitalizations become more and more difficult because investor appetite for new sales of shares declines...Efforts to overcome the credit squeeze have become hostage to the economic slowdown that the squeeze helped create.
6413. thoughtful - 6/30/2008 8:06:26 AM
Sorry, wonks, I think you misunderstood my 11 months. It refers to the number of months of housing inventory that's currently available...or the number of months it would take to sell off the existing inventory at today's sales pace. This is extremely high, near record levels and suggests that the housing market is far from settled. It did not mean that the housing situation would be resolved in 11 months...far from it.
6414. wonkers2 - 6/30/2008 2:17:39 PM
Thanks. We're on the same wavelength. More shoes are dropping every day. Michigan is a basket case. The Detroit school district is about to go into bankruptcy or whatever you call it when they run out of money. This morning's paper said the district is $400 million in the hole. Home foreclosures are everywhere as well as abandoned and burned out houses.
6415. thoughtful - 7/1/2008 6:40:49 AM
I was stunned when i read the stat that the drop out rate in detroit is 70%!!
6416. wonkers2 - 7/1/2008 10:50:40 AM
Detroit is a disaster area, between mistakes by the Big Three auto companies, the mayor's impending ouster, a city council bribery investigation, and so forth. If that weren't enough several government employee pension funds have been burned by subprime mortgage investments.
6417. wonkers2 - 7/9/2008 7:28:38 AM
A Prudent, Well-diversified International Investment Portfolio
6418. alistairConnor - 9/19/2008 4:19:24 PM
What can I say. except "I told you so".
6419. thoughtful - 9/23/2008 10:42:51 AM
Re the banking crisis, nouriel roubini from nyu has been the most right...unfortunately, he's also been the most pessimistic. For a better understanding of what's happening, I suggest his article on the shadow banking system collapse.
6420. jexster - 9/23/2008 10:57:33 AM
Thanks thoughtful!
I passed over that FT comment headline...figured it would cause brain freeze
Worth the effort tho
I am thinkin more and more that this bailout is another Republican scam. Just like Iraq, it can wait 43 days for a Special Session.
We've already been fooled way too many times as it is and had 4-5 chinese fire drills from the Bush regime
If things are so fuckt up that we can't wait a few weeks to get it right, things are too fuckt up to be rushing in the first place and a quick bailout won't make any difference
6421. thoughtful - 9/23/2008 11:17:38 AM
Well i would tend to agree in that the treasury dithered for about 15 months tho the seriousness if the issue kept becoming more apparent. Then suddenly, in the last week, they have to cram something through?
Given this is the largest financial crisis since the great depression...if not bigger than that...then congress should do the right thing and stick as long as it takes to do it right.
And if bernanke had any brains, he'd be talking to congress independently...not looking like a paulson puppet on this thing. Rather than a unified approach, he'd be far wiser to play a contra role and say, here's where I agree with paulson's plan, and here's where i disagree...that way congress can pass a better plan, not look spineless, yet that would limit their action to keep it reasonable..something that might not happen if they're listening to who knows who on this thing.
6422. jexster - 9/23/2008 12:03:54 PM
My sense is that the Dems having succumbed to their God given sissy instincts were ripe for stampede on Friday but having heard from their constituents and a few REAL GOP Free Marketeers like Bunning, there's a 50-50 chance that real action will be delayed until a post erection special session
6423. thoughtful - 9/23/2008 12:46:08 PM
it all depends on the lobbyists...if they start spreading their cash around to the financially shaken congresspeople (as they are all wealthy with lots of personal wealth seesawing in these markets) they'll pass exactly what the admin is asking for ...the admin having already gulped from that trough.
you see, that's the big diff for them...subprime borrowers going under...who cares? congress ain't subprime. But when the shock waves hit prime borrowers, brokerages that hold their personal accounts, etc....then suddenly you'll see ACTION!
6424. wonkers2 - 9/23/2008 3:11:06 PM
The Paulson/Bernanke proposal appears to be hitting some rough weather in Congress, as well it should.
6425. arkymalarky - 9/23/2008 3:25:50 PM
It's going to be a blinking game now, and if they're desperate enough in the administration, they'll blink first and accept whatever constraints and changes congress chooses to put on it. If they can afford to hold out then either it isn't as bad as they're saying or they're insane. And if we don't insist on major and permanent reforms and regulations, we're insane.
I can't imagine one huge bailout will fix something so massively broken. I can see the US ponying up and things still falling apart. If they shut out the middle class in this deal, that's exactly what will happen. IOW, it seems very possible that 700 billion dollars is too little too late.
6426. jexster - 9/23/2008 3:55:37 PM
No Pain
No Gain
NO Cash for Trash
Financial Times OpEd:
6427. jexster - 9/23/2008 3:57:24 PM
I'd liquidate 7 of McCain's 8 houses and 11 of his 13 autombiles..all of The Wonkers Family Sailing Fleet...send the balance due to The Bush Family and every registered Republican....sell Texas to Mexico at fire sale price
6428. jexster - 9/23/2008 4:24:49 PM
Chicago Grad School of Bidness
6429. jexster - 9/23/2008 4:54:46 PM
From the Dept of DUH
Why Paulson is Wrong
Luigi Zingales - Robert C. Mc Cormack Professor of Entrepreneurship and Finance
University of Chicago -GSB
(pdf)
When a profitable company is hit by a very large liability, as was the case in 1985 when Texaco lost a $12 billion court case against Pennzoil, the solution is not to have the
government buy its assets at inflated prices: the solution is Chapter 11.
6430. jexster - 9/23/2008 5:16:23 PM
As during the Great Depression and in many debt restructurings, it makes sense in the current contingency to mandate a partial debt forgiveness or a debt-for-equity swap in the financial sector. It has the benefit of being a well-tested strategy in the private sector and it leaves the taxpayers out of the picture. But if it is so simple, why no expert has mentioned it?
The major players in the financial sector do not like it. It is much more appealing for the financial industry to be bailed out at taxpayers’ expense than to bear their share of pain. Forcing a debt-for-equity swap or a debt forgiveness would be no greater a violation of
private property rights than a massive bailout, but it faces much stronger political opposition. The appeal of the Paulson solution is that it taxes the many and benefits the
few. Since the many (we, the taxpayers) are dispersed, we cannot put up a good fight in Capitol Hill; while the financial industry is well represented at all the levels. It is enough to say that for 6 of the last 13 years, the Secretary of Treasury was a Goldman Sachs alumnus. But, as financial experts, this silence is also our responsibility. Just as it is difficult to find a doctor willing to testify against another doctor in a malpractice suit, no
matter how egregious the case, finance experts in both political parties are too friendly to the industry they study and work in.
6431. thoughtful - 9/25/2008 12:18:16 PM
Here's a thought.
If the estimate is $700B in bad mortgage debt, why shouldn't the govt step in at the mortgage level and guarantee payment of X% owed...say 75%. That way, the bill will be $500B, the toxic waste will be far less toxic thus investors will be willing to buy and hold the debt, the value of the debts will be improved thus recapitalizing the banking and the nonbanking system, and people will be able to stay in their homes and thus eliminating the nasty blowback on the economy of homelessness, deteriorated neighborhoods, etc.
Wouldn't be because that wouldn't directly help the financial industry with large injections of cash with no risk attached and they wouldn't have to eat any of the loss, would it?
Nah.
6432. iiibbb - 9/25/2008 1:47:14 PM
I have a question for any of our economists out there. I admit I fly a little by the seat of my pants. I try to make sensible decisions.
Although getting into a house a year ago was a risk, I had to do it because it was part of the deal with my wife moving here. We did try to under-buy the house so we wouldn't be house poor. My goal was to buy something that I could support with my income only, and my wife's would be gravy.
Since we only planned on being here a few years we thought about an ARM, but decided against it because the interest rates were actually pretty close and it didn't seem like it was going to save us much. So we got a 30-yr.
I would have most preferred to go with a credit union, but there weren't any good ones here in my estimation. Instead (i.e. they didn't sell our loan to another entity) we went with a regional bank that finances their own loans. In retrospect I'm thinking this might have been a fortuitous move on our part. We liked the idea of dealing directly with the holder of our mortgage, and I would think they did a better job of risk management when it came to loan applications. In fact the loan officer made a specific point of trying to talk us out of an ARM while we briefly considered it.
6433. jexster - 9/25/2008 6:02:22 PM
Economists are lining up against the Mago/Wonkers2 scam
150 of em including Nouriel..but he's a Muzzie so he don't count
Bailing Out the Yachts
by Meteor Blades (KOS)
There’s just no choice we are told. We must must must rush to bail out Wall Street right now or most of us will be queued up at soup kitchens on Main Street by Christmas. And for many Christmases to come. Any of us daring to say "wait a minute" clearly don’t understand basic economics. We should get out of the way...
6434. jexster - 9/25/2008 6:03:16 PM
Malefactors of great wealth
6435. jexster - 9/26/2008 8:30:07 AM
Floyd Norris of the NyT takes a look at the ugly underbelly of the Bush bailout. All comes back to how do you put a value on something no one wants to buy without getting stuck with worthless paper...not encouraging
6436. jexster - 9/27/2008 7:52:06 PM
Bailout: A Prisoner's Dilemma for Congress
6437. TheWizardOfWhimsy - 9/27/2008 9:16:34 PM
6438. thoughtful - 9/29/2008 8:47:13 AM
isbs, was there a question in there?
6439. alistairconnor - 9/29/2008 9:00:14 AM
iii : how are real estate prices doing where you are?
In the event that they are substantially down, what are the prospects of holding onto the house and renting it out when you move? i.e. would the rent cover the payments?
6440. iiibbb - 9/29/2008 9:40:32 AM
They've been okay as of a few months ago. This market did not have a bubble when we got here.
I think we might have a shot at renting it... maybe not for as much as the mortgage, but maybe close enough to keep out of trouble. Assuming people have jobs of course.
6441. iiibbb - 9/29/2008 9:41:52 AM
Message # 6438
Not much of a question in there... if we're fucked, we're fucked I guess.
6442. jexster - 9/29/2008 12:28:53 PM
Channeling Milton Friedman? Let Em Fail
Time OpEd
Jump fuckers
6443. jexster - 9/29/2008 7:52:50 PM
Samuelson: A Bankrupt Economics
6444. jexster - 9/30/2008 5:10:34 PM
What are economists saying about the bailout bill that just went down the tubes? TPM rounds up expert opinion in its new Bailout Burnout page.
6445. jexster - 9/30/2008 9:16:50 PM
Princeton Economists Hyun Shin, Markus Brunnermeier, Harrison Hong, Paul Krugman, and Alan Blinder.
[1 HR YouTube video]
6446. thoughtful - 10/1/2008 9:11:09 AM
why does youtube keep saying the video is not available and later it is???
6447. jexster - 10/1/2008 11:14:57 AM
That German guy from Princeton is HOT! I'd take every one of his classes. Also noticed that the Princeton meltdown panel is brought to us on the UC (UCali) network at YouTube.
There's all kinds of shit on there..and I thought YouTube was just politics and teenies
6448. jexster - 10/1/2008 11:16:40 AM
Markus Brunnemeier
6449. jexster - 10/3/2008 8:27:44 PM
Bank Fraud: Mark to Market Rule Change Should Meet Its Maker
6450. arkymalarky - 10/3/2008 8:38:47 PM
It seems like mark to market, as I read it, would make matters far worse later. It's like floating in a hot air balloon that has developed a leak, and instead of trying to find a way to drift down to a soft landing, continuing to fuel the balloon higher until it finally, inevitably explodes.
Things could have come down to normal, reasonable levels, resulting in manageable pain, with proper regulation and management. Instead, they've been pumped up and up and up, and it seems like the corporates at the control keep screaming to go higher still. How many possible ways can things get down to a realistic level from this height?
6451. thoughtful - 10/4/2008 7:42:55 AM
Mark to model is what got us into this mess. Mark to market is the way out...if anyone can find a market for this stuff.
I support Roubini's solution which is a multi-tiered approach similar to what the Swedes did in the 90s. This isn't the first banking crisis and it won't be the last. These things have been solved well, and solved not so well. What works is not a mystery. What is a mystery is why these idiots (paulson, that's you) in washington still cling to their failed 'deregulation is king' policy. Bite the bullet. The system failed. Step in, nationalize, recapitalize, parse the winners and losers, and start keeping homeowners in their homes.
6452. arkymalarky - 10/4/2008 8:57:09 AM
That's the thing, though. Can there be a market for such a large and over-priced inventory as the housing market?
I totally agree with you on what to do.
6453. arkymalarky - 10/4/2008 8:58:29 AM
Who knows about the CDS I was reading about? Is that relevant, and if so, how?
6454. jexster - 10/4/2008 10:34:03 AM
Mark to market is sound accounting..they're just trying to hide the insolvency of the banks
6455. jexster - 10/4/2008 10:34:23 AM
Thoughtful's the cds expert
6456. jexster - 10/4/2008 10:37:37 AM
From the RGE site...This is why Thoughtful is the go-to-gal
6457. jexster - 10/4/2008 8:02:26 PM
The alternative to mark to market is mark to model...guess whose model.
6458. wonkers2 - 10/5/2008 5:04:19 PM
Oakland county where I live has more than 800 bank branches of more than 50 different banks. More banks than filling stations.
6459. jexster - 10/5/2008 5:20:11 PM
Wonkers Shops Here
Oakland county rec'd a nice write up in the WaPo today!
Is that the Dollar Store where U shop????
Or do you get Osso Buco???
But in Birmingham, there is still osso buco, and cases of new fall pinots are stocked at Papa Joe's Gourmet Market
Dollar General Store
Farmington Hills, MI
6460. jexster - 10/5/2008 5:25:39 PM
6461. jexster - 10/7/2008 10:39:40 AM
Dr.Doom is happy this morning, please with the Fed's decision to buy corp. commercial paper
6462. jexster - 10/8/2008 7:39:39 PM
Roubini today:
6463. wonkers2 - 10/8/2008 10:54:15 PM
Scary. I prefer Houdini.
6464. thoughtful - 10/9/2008 7:35:34 AM
Given how slowly the policy wheels move, you can't be too alarmist when trying to stimulate action.
6465. wonkers2 - 10/9/2008 9:39:57 AM
6466. jexster - 10/9/2008 1:39:21 PM
Godless Communism!
6467. jexster - 10/9/2008 1:41:50 PM
The 180 degree turn in the Treasury position is driven by the disastrous market reaction to the passage of this legislation and to the realization that US banks are in such a deep trouble that, absent a direct partial public takeover of the banks this severe financial crisis will get much worse. After the Senate passed the Act on Wednesday there was no relief rally in the stock market: the next day Thursday the stock market tumbled by 5%; and then on Friday when the House finally reversed itself and passed the Act the Dow fell by about another 400 points between the time the legislation passed and the close of market.
Things got worse this week when on Monday and Tuesday and Wednesday stock prices tumbled even more in spite of new and aggressive actions by the Fed (interest payment on reserves and doubling of TAF on Monday; plan to purchase commercial paper on Tuesday; coordinated policy rates cuts on Wednesday). By yesterday Wednesday it was clear that we are close to a market crash that could – at this point - occur any time. When major policy actions for three days in a row fail to revive the stock market when such market is obviously oversold it is clear that there are no bottom buyers left and the risk of a 1987 like market crash is now at its highest level.
So by yesterday Wednesday it was clear that we were on the verge of a systemic financial meltdown and that that flawed TARP has been effectively Tarp-edoed by the market that realized that this approach to a systemic financial crisis was flawed. Thus Treasury and Paulson had to reverse themselves 180 degree and start supporting a direct partial takeover of US banks by the US government: you may not want to call is partial nationalization of the banks as the term is politically incorrect; but this is effectively what will happen as the US will directly inject capital – in the form of preferred shares (and possibly even common shares and sub debt) into financial institutions.
6468. alistairconnor - 10/13/2008 7:54:33 AM
Good lord. Krugman wins the Nobel prize for economics.
A nicely timed "fuck you" to GWB and his economic legacy.
6469. jexster - 10/16/2008 2:49:45 PM
Behold His Unseen Hand
Uncle Phil Gramm's derivative market now worth more than the planet's combined wealth.
6470. thoughtful - 10/22/2008 9:12:56 AM
In honor of the financial crisis:
Now we take our time
So nonchalant
And spend our nights
So Bon vivant
We dress our days
In silken robes
The money comes
The money goes
We know it's all a passing phase,....
We light our lamps
For atmosphere
And hang our hopes
On chandeliers
We're going long
We're gaining weight
We're sleeping long
And far too late
And so it's times
To change our ways
But I've loved these days.
Now as we indulge
In things refined
We hide our hearts
From harder times
A string of pearls
A foreign car
Oh we can only go so far
On caviar and Cabernay.
We drown our doubts
In dry champage
and soothe our souls
with fine cocaine
I don't know why i ever care
We'll get so high
And get nowhere
We'll have to change our jaded ways,...
But i've loved these days.
So before we end
And then begin
we'll drink a toast to how it's been
a few more hours to be complete
a few more nights on satin sheets
A few more times that I can say,..
I've loved these days.
6471. thoughtful - 10/22/2008 11:03:07 AM
Via calculated risk, farewell of a hedge fund manager:
Andrew Lahde, the hedge-fund manager who quit after posting an 870 percent gain last year, said farewell to clients in a letter that thanks stupid traders for making him rich and ends with a plea to legalize marijuana.
Lahde, head of Santa Monica, California-based Lahde Capital Management LLC, told investors last month he was returning their cash because the risk of using credit derivatives -- his means of betting on the falling value of bonds and loans, including subprime mortgages -- was too risky given the weakness of the banks he was trading with.
``I was in this game for money,'' Lahde, 37, wrote in a two-page letter today in which he said he had come to hate the hedge-fund business. ``The low-hanging fruit, i.e. idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.
``All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other sides of my trades. God Bless America.''
6472. wonkers2 - 10/22/2008 11:14:29 AM
Touching! I met one in Tiburon last year who had three big boats, one of which was named "Free Roll" two houses on the water and a tropy wife. My gambler son explained that free roll means rolling the dice with other people's money. I looked the former hedge fund manager up on the Net and found that he'd cashed out his hedge fund a year or so earlier and walked away with a bundle. He was also around 35.
6473. thoughtful - 10/22/2008 2:04:22 PM
As in the Dire Straits song...get your money for nothin' and your chicks for free!
6474. wonkers2 - 10/22/2008 3:16:43 PM
However, its not working out that way for everybody! Merle Hazard Meets Arthur Laffer In The Hamptons
6475. wonkers2 - 10/22/2008 3:24:34 PM
6476. wonkers2 - 10/22/2008 9:26:23 PM
Harvard Experts Discuss the Credit Crisis
6477. concerned - 10/23/2008 12:18:58 AM
Lorne Gunter: Thirty years of warmer temperatures go poof
Ooops!!!!!
There goes the justification for the existence of all the global warming chicken little nazi bastards!
6478. thoughtful - 10/23/2008 9:42:05 AM
Thanks, wonks...
6479. wonkers2 - 10/24/2008 11:17:17 AM
6480. wabbit - 10/27/2008 8:56:01 AM
Stock around the world took another heavy beating Monday, with shares in Japan falling to their lowest level in 26 years, as fears of a global recession continued to sweep markets.
U.S. futures, which offer an indication of how Wall Street may open when trading begins in New York, were sharply lower.
European shares tumbled. Britain's FTSE 100 down 3.7%. The CAC-40 in Paris was down 5.6% and Germany's DAX fell 3.3%
In Asia, Japan's benchmark Nikkei index finished the session 6.4% lower - its worst closing level since October 1982. Hong Kong shares were pummeled, with the Hang Seng index plunging 12.7%…
6481. wonkers2 - 10/27/2008 9:24:06 AM
Scary. Let us know when the market has bottomed!
6482. wabbit - 10/27/2008 9:26:32 AM
… so we'll know when to buy stocks!
6483. alistairconnor - 10/27/2008 10:50:42 AM
A lot of people are talking about the Euro disintegrating.
A number of central European currencies are under attack from speculators : Hungary, Roumania, Ukraine etc... if they crash, then they presumably take down a bunch of European banks which have heavy, sensible investments in their economic development. Also, central Europeans typically buy their houses etc with loans denominated in Swiss francs or in euros, meaning they will take a severe hammering.
The question is, can the Euro hold together in such an environment? Italy might drop out the bottom, then the crap hits the fan.
6484. alistairconnor - 10/27/2008 10:53:03 AM
The $NZ is taking a severe hammering, as I always knew it would... the day the Japanese housewives bring their yen home. Carry trade : borrow yen at a low interest rate, invest it in countries like NZ which have a high interest rate. Free money, until exchange rates start to move... then everyone unwinds their positions, and your target currently falls through the floor.
Actually, when I think about it, it's lucky I'm broke in both $NZ and euros.
6485. anomie - 10/27/2008 11:39:37 AM
I will benefit from a cheaper Euro, (just for travel), so I'm glad to see it. But I'm not sure I understand the forces that caused such a drop. Is the US dollar getting more scarce because of the credit crunch? I understand that. But then, wouldn't the Euro be more scarce for the same reasons? Anyone understand what forces are at work?
6486. alistairconnor - 10/27/2008 12:02:10 PM
I've sort of studied what's going on, so here's my opinion :
What got the ball rolling was the run on US banks and pseudo-banks resulting from the subprime crisis. In order to bring in ready cash to defend themselves, the banks etc. started unwinding their commodities positions.
There's been a lot of speculation in commodities : oil etc : denominated in $US, not in euros. If major players start selling, then everyone else wants to sell too, and the bottom drops out (that's what's happened to oil, in the short term). Everyone needs dollars in order to liquidate their positions.
This has a knock-on effect which is getting enormous. Emerging economies, who are guiltless in the subprime business, are taking a hammering because people are pulling their money out in order to meet their obligations elsewhere. The real economy is taking a hit everywhere in the world, because people are putting the brakes on both production and consumption.
It reminds me of the Great War, which was inexorably triggered after an assassination (as I learned in high school) because of railway timetables.
6487. alistairconnor - 10/27/2008 12:05:46 PM
Opinions differ as to what happens next to the $US. Some say that when the stock market finds its bottom (with both hands), then the dollar will stop rising, because there will no longer be a capital account inflow due to positions being unwound. Then it either declines towards its starting point, or crashes.
Depends on the Chinese, to a great extent. I'm a bit puzzled as to why they haven't started unloading dollars into a rising market... seems like a golden opportunity... Either they think the $US will be OK in the long term, or they really don't care that much about foreign exchange : what matters to them is continued economic growth, and for that they need the US to stay solvent.
6488. anomie - 10/27/2008 12:26:37 PM
I think that helps AC, if I understand. The demand for dollars actually went up because oil stocks (and other commodities) were being sold off in dollars, thus the buyers perhaps cashed in other currencies, including the Euro, for dollars.
And yes, let's hope the Chinese hold off a few months before dumping more dollars into the system. I'm gona see if I can buy some Euros today w/o going to the airport.
6489. wabbit - 10/27/2008 12:56:34 PM
Nonono, don't you guys get it? It's all about ACORN and Obama and their cohorts, they are the ones to blame for the current economic fiasco, it's all on them. Damn liberals are trying to undermine the Constitution and ruin this country.
Just ask Rush Limbaugh, who is ranting about it right now, or the National Review.
And you friggin' frogs with your socialized medicine should stay out of it. Commies.
LOL! That was fun!
6490. anomie - 10/27/2008 2:44:09 PM
Rush Limbaugh can kiss my a...no, I wouldn't want him anywhere near me. Let him kiss a donkey's ass...Nov 5th.
6491. anomie - 10/27/2008 2:50:10 PM
But anyway...a few months ago, my prediction would have been inflation. A lot of cheap money was going into home loans, people were cashing and spending home equity, and Bush and Co were borrowing like crazy to fund the deficit. I couldn't see how the frenzy could contain itself with inflation. But then, it seems oil and food and consumer goods production (imports?), have kept up the pace and interest rates are staying historically low, and there's plenty of housing to go around. It still seems to me there's too much money out there.
6492. anomie - 10/27/2008 2:51:06 PM
Above should read, "without" inflation...
6493. wonkers2 - 10/27/2008 4:29:18 PM
Let him kiss Bush's ass, and Cheney's ass, and Rumsfeld's ass. Oh! I forgot that's what he's been doing for 8 years.
6494. alistairConnor - 10/27/2008 5:02:28 PM
Deflation seems more likely in the next few years. Unemployment, downward pressure on salaries, trade wars and dumping, what else? oh the peak of oil production will go unnoticed some time in the next few years because Opec will reduce production to shore up prices, in the face of weak demand.
6495. wonkers2 - 10/27/2008 5:15:06 PM
Bleak!
6496. wonkers2 - 11/19/2008 11:12:58 AM
The End of Wall Street by Michael Lewis Frightening! (Not the end, but rather Lewis's insider view of what's been going on.)
6497. thoughtful - 11/19/2008 12:51:38 PM
wow wonks...there are some precious lines in that article:
In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000....
He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number....
When a Wall Street investment bank screwed up badly enough, its risks became the problem of the U.S. government. “It’s laissez-faire until you get in deep shit,” he said, with a half chuckle....
Something for nothing. It never loses its charm.
Thanks for posting it.
6498. wonkers2 - 11/19/2008 6:31:16 PM
Incredible that these jerks are managing so much money. Another bear who I bet figured the situation out is David Einhorn although I haven't seen anything about him recently. I guess he shorted Lehman before its demise.
6499. wonkers2 - 11/19/2008 6:35:08 PM
6500. thoughtful - 11/24/2008 9:32:17 AM
Haven't read it yet, but it promises to be good...anatomy of a meltdown by john Cassidy at the NYer mag with bernanke.
6501. jexster - 11/25/2008 7:54:34 PM
My first cousin's eldest is getting married. So I googled her for funzies
I don't have a clue what some of this shit is....
EDUCATION
Princeton University, Princeton, New Jersey
Ph.D., Department of German, 2007
M.A., Department of German, 2004
Dissertation: Explications: Etymology as Language Science, 1822-1941, advised by Michael Jennings
(Princeton University) and Barbara Hahn (Vanderbilt University)
Jewish Theological Seminary, New York, New York
M.A., Interdisciplinary Jewish Studies, 2001
GPA: 4.07
Justus-Liebig Universität, Giessen, Germany
Visiting Student: German Literature, 1998-9
GPA: 1.0 (1=A)
Princeton University, Princeton, New Jersey
A.B., Comparative Literature, 1998
GPA: 3.94, Highest Honors
Senior Thesis: "The Center of All Relations": Death, Destruction and Linguistic Redemption in the
Writings of Walter Benjamin
PUBLICATIONS
“Infernal Poetics: Peter Weiss and the Problem of Postwar Authorship.” The Germanic Review 82. Special
Issue: Figurations of the Undead (2007). Forthcoming.
“Ambiguity Intervenes: Strategies of Equivocation in Adorno’s ‘Der Essay als Form.’” Modern Language
Notes: German Issue 122 (2007). Forthcoming.
“Istanbul, 1945: Erich Auerbachs Mimesis an der Grenze des europäischen Daseins.“ Trans. Tobias Wilke.
In: Barbara Hahn (ed.), Im Nachvollzug des Geschriebenseins. Literaturtheorie nach 1945.
Würzburg: Königshausen & Neumann, 2006. Forthcoming.
“Istanbul, 1945: Erich Auerbach’s Philology of Extremity.” Arcadia 41 (2006), pp. 433-457.
“Disarming the Double: Kant in Defense of Philosophy (1766).” The Germanic Review 81 (2006), pp. 99-
120.
“Bodily Negation: Carl Schmitt on the Meaning of Meaning.” Modern Language Notes: Comparative
Literature Issue 120 (2005), pp. 1066-1090.
CONFERENCE PAPERS
“Sprachbäume. Ein interdisziplinäres Projekt des 19. Jahrhunderts.” (“Language Trees. A 19th Century
Interdisciplinary Project”). Delivered at Interdisziplinarität als Wissenschaftsparadigma
(Interdisciplinarity as Research Paradigm). Doktorandenkolloquium der Studienstiftung des
deutschen Volkes, June 16-18, 2006
“Infernal Poetics: Peter Weiss and the Problem of Postwar Authorship.” Delivered at The Human and its
Others, Annual Convention of the ACLA at Princeton University, March 23-26, 2006
“Dissonant Modulations: Equivocation as Method in Adorno’s ‘Der Essay als Form.’” Delivered at Surface
Tensions: Aesthetics and Politics Revisited. A Colloquium on Frankfurt School Cultural Theory,
Princeton University, September 2002.
6502. jexster - 11/25/2008 10:53:01 PM
KQED Quest: For the Electric Car
6503. alistairconnor - 12/5/2008 5:17:04 AM
Dredging back in this thread, buried in a discussion triggered by ElliotRW Message # 5550 about financial derivatives and gambling, I came across this pearl (or chicken McNugget) of wisdom Message # 5554 :
Perhaps unlike the US experience, the history of popular capitalism in France is chequered with outrageous scams in which small investors have lost their life savings, whereas the smart money has walked away intact, at worst. The most recent of these is the Channel Tunnel.
Does this illuminate anything with respect to your project, Elliot? Probably not...
Or perhaps. I think what I'm getting at, is that the small, knowledge-poor investor is in an exceedingly weak position when undertaking calculated risks with money. This fact creates a market : because there exists an information gradient (I'm improvising the vocabulary), this ignorance is a resource that can be mined by the knowledgeable.
This by way of introduction to my current project : gambling on the stock market.
Perhaps it's just early-onset senile dementia, but I've come round to the view that, though knowing nothing about economics, I'm a natural-born visionary philosopher, with a long view about where humanity is going; and that, especially considering the ongoing economic meltdown, I have at least as much of a chance as any expert of picking the bottom of the market, and of successfully picking stocks on a five-year horizon.
This is not unrelated to my (unsuccessful) foray into the wine business : I quickly realised that the experts weren't actually any "better" at picking a "good" wine than I was. What they had was an enormous amount of experience and vocabulary which enables them to rapidly describe why a wine is "good" or not.
A few ground rules that I'm making up for myself :
* I won't buy into any company unless I want them to do well. No arms merchants, no banks, as trivial examples.
* I won't buy a stock unless I intuitively understand what the company does and expect it to do OK in the difficult climate of the next five years. No car makers, no banks.
* Only big companies, that I already have some general knowledge about.
* Only French companies. Not particularly out of nationalism (OK maybe a little bit), mostly because of the general knowledge question, also the expectation that, in the worst case, they will tend to be "too big to fail" in the local context.
I'm intending to gamble about ten thousand euros, which is about half of my liquid assets. I intend to post my portfolio here, not because I think anyone will be interested in the detail, but because I've got to write it down somewhere, to articulate how I justify my picks to myself. I'll probably revisit it every six months or so, I have no particular shame or embarrassment about how wrong I'll probably be.
6504. alistairconnor - 12/5/2008 5:47:35 AM
Speaking of being wrong :
Message # 6212 3/7/2006
What peak oil looks like
Maybe it was May or December 2005. Maybe it's this month. Maybe even next year...
No, it's this year.
I sure hope Con never comes back, that'll save me $100.
6505. alistairconnor - 12/5/2008 6:28:05 AM
How smart have I been in the past with the stock market?
I had some of my money in a stock-based fund, starting in 2000 when the CAC 40 (French index) was at about 5500, held it for five years while it went down to 3000 then climbed back, panicked and sold in May 2006 Message # 6307 when it was about back to its starting value, kicked myself for a year while it went up 6000... and now it's flirting with 3000 again. While my money has been sleepily earning 4%.
So I managed to preserve my capital, while avoiding two opportunities to lose half of it. Not too bad.
Now, it's conceivable that it could go down another 1000 points, for example. But I don't think it'll stay there.
I think I may take a slice of a stock fund, as a point of comparison for my hand picks.
6506. wonkers2 - 12/5/2008 8:07:29 AM
Let us know when the market bottoms.
6507. wonkers2 - 12/5/2008 8:24:54 AM
Martin is correct. High gas prices were a blessing because they focused the country�s attention on the need for more fuel efficient cars. The ideal solution from an economist�s standpoint would be to gradually increase the gasoline tax over five years until the pump price of gasoline equals the price in Europe. That would give car makers and customers an opportunity to adjust to the higher cost of fuel. The downside of that approach is that the tax would be regressive, i.e., the burden would fall heaviest on the poor. Taxing personal, non-commercial gas guzzlers would be a less regressive alternative. With a weight and horsepower tax buyers of heavy, high horsepower personal cars or trucks or SUVs would be required to pay for the cost of externalities (pollution, greenhouse gas, etc.)attributable to their choice of vehicle. This could be accomplished by imposing a tax on horsepower and/or vehicle weight. Soon car makers would be applying the laws of physics to produce smaller, more fuel efficient vehicles to satisfy buyer demand for them. This should have been done 30 years ago.
Leave a reply
name (required)
(will not be shown) (required)
website
About this Blog
The QUEST Community Science Blog explores local science, nature, and environment issues & experiences in Northern California. A collaborative effort, our many writers come from local museums, zoos, science centers and research institutions, as well as KQED's TV and Radio producers covering stories in the field.
Archives
Post Categories
6508. alistairconnor - 12/10/2008 12:35:23 PM
Here's a shocker, folks :
What this graph says is that ALL the growth in US GDP since 2000 has been funded by increased debt. ALL of it.
Can the US economy now be credibly stimulated by increasing debt still more?
6509. thoughtful - 12/10/2008 2:17:17 PM
Interesting chart that is completely bogus.
GDP is the sum of the output of goods and services in the economy.
Debt is the borrowing against existing assets.
The two have no direct relationship...certainly no simple relationship like subtracting one from another.
The other thing he did wrong was subtracting in real dollars instead of adjusting the calculation using the deflators. Chain weighted dollars are not additive.
6510. wonkers2 - 12/10/2008 8:00:17 PM
VK, your definition of "liberal bias" differs from mine. The NYT Washington Post and just about every newspaper and all the TV networks are staunch supporters of the U.S. foreign policy and corporate establishment. To get a liberal slant you have to go to non-mainstream media publications like The Nation, Mother Jones, Harper's and a few others. The NYT is liberal on some issues, but endorsing a Democrat is not the same as having a liberal bias. There are Democrats and Democrats. The NYT tends not to support liberal Democrats. CNN is hopelessly biased in favor conservative, establishment positions. As David Leonhardt pointed out Wolf Blitzer commented on the GM-Ford-Chrysler aid or bailout issue with a highly misleading giant graphic behind him stating or implying that UAW auto workers made $75/hour compared to $40 or $45 an hour at the transplants, thus inflaming anti-union sentiment and supporting the Republican senators who are determined to block the deal the Dems reached with the White House. And all the TV networks have given their air time repeatedly and one-sidedly to retired generals and other members of the foreign policy establishment put forward to them by the Pentagon to shill for the Bush administration's invasion of Iraq. And as I pointed out NBC shit-canned Phil Donohue before the invasion for expressing doubt about it.s Hardly a liberal bias. Tim Russert built his career on sucking up to the establishment and pitching softballs to his guest on Face the Nation. The only sign of a liberal bias is MSNBC in the evening with Kieth Olbermann, Rachel Maddow and Chris Matthews.
6511. alistairconnor - 12/11/2008 12:43:38 PM
Tful:
The other thing he did wrong was subtracting in real dollars instead of adjusting the calculation using the deflators
No, it's inflation-adjusted (based on the dollar's value in 2000).
Yes, it's rather arbitrary to compare a dollar of debt to a dollar of GDP, as the linked article discusses; but the correlation is striking nonetheless.
If a credit crisis can so rapidly and so profoundly depress an economy, it is certainly plausible that the recent growth was driven primarily, and unsustainably, by expanding credit.
Certainly the question of re-starting economic growth is an interesting one... can it be done with smoke and mirrors, now that everyone has seen through the illusion?
6512. alistairconnor - 12/11/2008 12:45:57 PM
I'm less and less sure that we're at the bottom of the market...
China's exports declined by 2.2% last month... the first month on month decline in seven years
I think I'll start with alternative energy stocks. And nuclear too. (Please don't tell my Green friends)
6513. thoughtful - 12/11/2008 3:49:03 PM
AC: No, it's inflation-adjusted (based on the dollar's value in 2000).
They use chain weighted deflators now that yield data that is NOT additive...so you can't take the pieces and parts of the GDP and add them up to get the total GDP like you could when they used implicit price deflators.
6514. thoughtful - 12/11/2008 3:51:43 PM
The point is that you do need credit of some degree to run a modern economy...quite a bit in fact. But when you have a complete collapse in the financial system you are squeezing the global economy back to a cash-only basis which is very small indeed.
Granted there was clearly excessive leverage that drove growth in asset prices up and risk premia down. A lot of that deleveraging is going on now and that is painful. But that does not translate into that all the growth of the last decade was illusory because of credit. Some of it was real....in fact a lot of it was.
6515. alistairConnor - 12/12/2008 2:28:26 AM
It seems that, in recent years, the economy required not just credit, but constantly expanding credit. The trick now is to get it back on an even keel, never mind expansion, without that.
6516. marjoribanks - 12/12/2008 4:56:37 AM
AC,
Standard disclaimer: I a not a finance professional.
However, I have done significantly well from investments in stocks over the past 15 years or so that I have managed my own money. The only one coulda-shoulda that niggles is one that I discussed right here in the Mote when Google went public - I bought (thousands of shares) at like 103 or so, and like an idiot went and sold for a paltry gain of like 10-15% in a few weeks. Should have held, obviously.
All this by way of saying that I am not totally talking out my ass here, when I advise you very strongly not to fuck around with stocks right now. Even here, even after trebling the value of my investments (like every one else) in the past four years, even as "the fundamentals" of the listed companies on the SENSEX look pretty damn solid, I have pulled out every thin dime from the markets. My feeling: cash is already king, it will be as infallible as the pope all through 2009, and who knows what bargains will come our way in that time.
Now, don't get me wrong, I'm quite susceptible to your idea that you're a "a natural-born visionary philosopher", since I kinda think of myself like that. And here's what I'd like to share with you - if you were looking at what I am looking at, your vision would take in that every single damn thing in France, whether your car, or an hour of your work, or your baguette, or these very stocks, is waaay overpriced! The whole country is overvalued! The whole continent of Europe is overvalued! The reckoning will now play out - short, medium and long term.
To sum, should you wish to greatly increase the value of your investments in stocks in the long term, as you say, do not do not repeat do not invest in the French stock market. Think Russia (a bargain right now), think Asia, heck even think Turkey. I seriously doubt you'll crack even 5% for the next few years in the French markets.
6517. alistairconnor - 12/12/2008 6:18:52 AM
hehe. Thanks... In historical terms, you are certainly right. There's a reason they call them "emerging economies" : their growth rate will certainly exceed that of the developed economies, so mechanically, their stocks will perform better, in aggregate.
However, all that you say of Europe is doubly true of the USA. I expect the eurozone economy to have zero growth over the next few years; I expect the US economy to shrink.
You're wrong about the baguette by the way... it won't be getting cheaper. Buy wheat futures, you'll make a killing. I might check them out myself, but they are in the category of immoral investments for me.
I'm still thinking about my opening moves.
One thing I'm pretty sure of : I'm going to continue tilting at windmills. The only single stock I currently own is a NZ company, Windflow, which is currently scaling up production of their wind machines. I expect them to do exceedingly well over the next few years, because the technology covers a niche in the wind market.
Currently, the $NZ is at its historic low against the euro, so I'll increase my holding.
I don't think I'll buy any other NZ stocks, because I expect the economy to do badly in the next few years. Unless I come across a striking opportunity during the next month (I'll be over there)
Other than that, I will stick to the Eurozone. There are fiscal advantages to this, but mostly it's economic nationalism. This is where I earn and spend my money.
But you've got me thinking, I should have a look at stocks in, for example, Slovenia or Czechland, which I expect to do well in general.
6518. alistairconnor - 12/12/2008 7:34:11 AM
... a quick Czech check indicates I won't be writing any Czech cheques... All the interesting industrials (trains, buses, machine tools etc) seem to be wholly owned, by foreign industrials (Siemens, Renault etc) or funds. Obvious really. They must be so much more profitable than the parent company's domestic operations.
But I certainly won't be buying any Russian stocks... I expect oil prices to rise sharply, but probably not for a couple of years, too late to save Russia from a big devaluation and/or meltdown.
6519. alistairconnor - 12/12/2008 7:43:48 AM
I'm thinking "alternative energy" stocks are a big winner over a five-year time frame : German solar, Danish wind, French nuclear. Cheap now because of general stock decline exacerbated by cheap oil. The general public may well believe that "$40 oil = Peak oil debunked", and as an investor I'm very happy if people think that. But the Obama administration, and even the European Union, have got the message and will be very actively planning, stimulating and promoting non-oil and gas energy strategy and infrastructure. And then $150 oil will be back, and the stock of those companies will do very well indeed.
I'd like to get into thin-film solar, but I can't find any publicly traded companies.
6520. alistairconnor - 12/12/2008 10:48:08 AM
Here's an analysis from one of Roubini's colleagues at RGEMonitor (requires free subscription)
Trade has become subordinate to and the handmaiden of capital flows. As capital flows slow down, global trade follows. Indirectly, the contraction of cross border capital flows and credit acts as a barrier to trade. In each case, de-leveraging is the end result.
This opens the way to "capital protectionism". Foreign investors may change their focus and reduce their willingness to finance the US. Wen Jiabao, the Chinese Prime Minister, indicated that China’s "greatest contribution to the world" would be to keep it’s own economy running smoothly. This may signal a shift whereby China uses its savings to invest in the domestic economy rather than to finance US needs.
I've been saying this for a couple of years... The Chinese are currently in a bad crisis as manufacturing demand crashes. They will not want to let this happen again. Sooner or later they will decide that it's better to pursue economic growth through their internal consumption market. And will stop lending the US the money to buy their goods.
This is why I see US material living standards falling in the next few years. Rising standards have been substantially funded by credit, extended by economies that were in surplus. The theory was that this was beneficial to all concerned; in practice, it was a matter of exploiting the privileged position of the US economy and dollar as the international reference.
Given the damage that this abuse of dominant position, combined with US macro-economic mismanagement, is inflicting on the world, I can't see the status quo ante re-emerging.
The implicit deal was, I suppose, that the rest of the world tolerated the US living beyond its means in exchange for stability of the system of international exchange. Since this is no longer the case, it'll be bye bye dollar.
6521. wonkers2 - 12/13/2008 9:50:21 AM
Some good investment advice for ordinary folks--Be smart, but don't think you're special
Madoff's $50 billion Ponzi scheme unravels
Hedge funds are Madoff victims
6522. wonkers2 - 12/25/2008 6:08:29 PM
6523. alistairconnor - 12/28/2008 7:00:46 AM
I've put my finger up the bottom of the market :
I bought my first three stocks today.
I will wait a couple of months before buying any more : I'm not convinced that the market has bottomed out in general.
Based on my own optimistic bias, and on the evidence that the world isn't actually coming to an end, but that the economy will change shape considerably over the next few years, I have decided that I can be smarter than the market.
EDF Energies Nouvelles
French electrical utility EDF's alternative-energy subsidiary, very active in developing wind and solar generating plants all over Europe. This feels much safer than picking a specific alt-energy tech company, which would be a gamble because some will win and others will fail.
Unless one believes that oil has suddenly become durably abundant and cheap, I think it is reasonable to believe that the value of this stock in the mid term will return to what it was six months to a year ago, i.e. about double its current price.
Séché environnement, a company specialised in waste management. Even in an economic downturn, I don't expect France to choose the WallE scenario and bury itself in its waste, so this well-managed company should have a bright future.
Areva is the French nuclear construction industry, about 90% state-owned, and mightily well prepared to profit from a renewed interest in building nuclear power stations, which I expect to take off globally over the next few years. I am renouncing decades of strong anti-nuclear opinions and activism by buying this stock.
6524. wonkers2 - 12/29/2008 12:32:12 PM
Why not start the weekend on Wednesday?"
6525. wonkers2 - 12/29/2008 12:32:47 PM
Why not start the weekend on Wednesday?"
6526. wonkers2 - 12/29/2008 12:33:02 PM
Oops!
6527. thoughtful - 12/30/2008 10:03:25 AM
AC you may be early....the stock market usually turns about 6 mos before the economy does and europe is expected to be in recession through 09. But certainly buying now, you should be past the worst excesses of the past few years.
6528. wonkers2 - 1/2/2009 10:41:18 AM
Oh! What it would be worth to be able to call the turn!
6529. wonkers2 - 1/2/2009 10:41:47 AM
Of the stock market.
6530. alistairconnor - 2/3/2009 8:13:17 AM
In December, Marj suggested Russian equities were a bargain. He may be right :
Uncertainty and fear are now making Russian assets worth less than they were during the last two national crises - in 1991, when the Soviet system collapsed; and in 1998, when the Treasury and the banking system defaulted.
But, with the economy in crisis, the value of investments depends largely on what Putin and Medvedev decide :
Without a banking and state audit system accountable to parliament, without a parliament accountable to the voters, and with regional governors and mayors appointed, not elected, where else [but with Medv/Putin] can the force of gravity be located? If not with them, then all of Russia has indeed decoupled, and equity is in danger of valuelessness.
6531. alistairconnor - 2/5/2009 12:53:12 PM
French stock market, for fun and (probably not for) profit :
I bought my first three stocks on 28th December Message # 6523, then three more on 9th January. Too early, no doubt, but hindsight be damned.
Two questions :
Did I pick the bottom of the market?
Did I pick the right stocks?
A month or so is ridiculously short to answer these questions, but I'm having fun...
And yesterday, I broke even for the first time. Today, I'm 1% ahead.
The French index, CAC 40, was worth :
3130 on 28th Dec
3300 on 9th Jan
3069 today.
So the answer is : no I didn't pick the bottom, but yes, I picked the stocks. But we'll see about that for real, in a year or two.
6532. alistairConnor - 2/19/2009 1:51:03 AM
This looks like a milestone
Swiss bank UBS pays fine,agrees to turn over details of US account holders to IRS.
“The Swiss are saying that this is the end of Swiss banking as they knew it,” said Jack Blum, an offshore tax specialist. “Nobody will trust the security of the Swiss bank account.”
What is needed is an international agreement between banks and governments to end tax fraud. The time is right. Could this open the floodgates?
6533. wabbit - 2/20/2009 1:03:49 PM