Throughout history states have disregarded treaties and acted in their own self-interest.
Steve Keen on Hard Talk
Steve Keen on how we can safely deflate the debt bubble. There may be alternative, less radical measures that could be taken to help the de-leveraging process but his basic message is right: deleveraging could cause 10 years or more of pain if we do not take measures to address the problem.
Thorium: the dream of green nuclear energy
While the idea of building small, thorium-based nuclear reactors – thought to be dramatically safer, cheaper, cleaner and terror-proof than our current catalog of reactors – can be shooed away as fringe by some, the germ of the idea began in the U.S. government’s major atomic lab, at Oak Ridge, Tennessee, in the 1960s, only to be left by the wayside as the American nuclear industry plowed ahead with its development of the light water reactors and the uranium fuel cycle.
Euro Zone Weighs Plan to Speed Fiscal Integration – WSJ.com
BERLIN—Euro-zone countries are weighing a new plan to accelerate the integration of their fiscal policies, people familiar with the matter said, as Europe’s leaders race to convince investors they can resolve the region’s debt crisis and keep the currency area from fracturing.
Under the proposed plan, national governments would seal bilateral agreements that wouldn’t take as long as a cumbersome change to European Union treaties, according to people familiar with the matter. …. The EU treaty allows countries to engage in “enhanced cooperation” if at least nine countries agree, circumventing the need for a unanimous treaty change among all 27 EU members.
via Euro Zone Weighs Plan to Speed Fiscal Integration – WSJ.com.
China’s ‘Princelings’ Pose Issue for Party – WSJ.com
The offspring of party leaders, often called “princelings,” are becoming more conspicuous, through both their expanding business interests and their evident appetite for luxury, at a time when public anger is rising over reports of official corruption and abuse of power.
State-controlled media portray China’s leaders as living by the austere Communist values they publicly espouse. But as scions of the political aristocracy carve out lucrative roles in business and embrace the trappings of wealth, their increasingly high profile is raising uncomfortable questions for a party that justifies its monopoly on power by pointing to its origins as a movement of workers and peasants.
The scourge of government debt – macrobusiness.com.au
A report on a talk by Yanis Varoufakis, author of The Global Minotaur, gives some nice history of how we got here. The Minotaur is a marvelous metaphor for what governments have allowed to occur in the global financial system. Now they, and all of us, are being skewered by its horns:
“In the immediate post-war era, Varoufakis claims, “the Americans begin to take seriously the redemptive mission to save capitalism from itself.”
But in doing so, against its apocalyptic competition with the Soviet Union, America spread itself too thin. Or too thick. By the time it was funding LBJ’s Great Society reform programme, alongside the dire weight of the Vietnam war effort, America stopped being a surplus nation. It went into deficit.
What followed was a worldwide project to balance everyone else’s books in line with the Americans own – what Paul Volcker, American economist and head of the Federal Reserve from 1979-1987, called the “controlled disintegration of the world economy”…..
Towards the end of his speech, Varoufakis claimed: “The Left and Right miss the significance of this current juncture. It is not terminal for capitalism, but it has ended the conglomeration of illusions in how we viewed the world. It ended the illusion we had that we had something called free market capitalism.”
via The scourge of government debt – macrobusiness.com.au | macrobusiness.com.au.
Giving Thanks: Ten Reasons ETFs Are Better Than Mutual Funds | ETF Database
For certain investors in certain circumstances, mutual funds make a lot of sense. But while these vehicles can still be useful in a limited number of scenarios, they are bleeding cash because ETFs are in many ways a better solution that can deliver a number of advantages:
- Lower Expenses = Higher Returns
- Intraday Trading
- Enhanced Precision
- Additional Firepower
- Tax Efficiencies
- Transparency
- Commission Free Trading
- No Minimums
- No Redemption Fees
- Money Managers On Demand (At A Fraction Of The Price)
via Giving Thanks: Ten Reasons ETFs Are Better Than Mutual Funds | ETF Database.
20 Banks That Will Get Crushed If The PIIGS Go Bust
Now it looks like Commerzbank could be the next bank to fall in the crisis, which we found to have exposure to the PIIGS second only to Dexia of non-peripheral European banks in this exposure stress test.
….We took a list of the largest European banks by assets and compared their market cap, common equity, and total exposure to PIIGS debt (thank you for the bank statistics, EBA!). Then we calculated exposure to PIIGS debt (sovereign and private) as a percentage of the banks’ common equity. (Notice that HSBC, ING, and even Societe Generale are all absent from this list.)
So far our track record is pretty good–we predicted that Dexia was the most vulnerable bank outside of the PIIGS back in July. If the eurozone crisis continues to escalate, we will see more and more banks bow to the pressure of exposure and become unable to borrow money.
Europe’s Last Best Chance – Michael Boskin – Project Syndicate
Reforming social-welfare benefits is the only permanent solution to Europe’s crisis. One hopes that, with the help of national governments, the European Central Bank, the International Monetary Fund, and the European Financial Stability Facility, the holes in the sovereign-debt-funding dike will be temporarily plugged, and that European banks will be recapitalized. But this will work only if structural reforms make these economies far more competitive. They must both lower the tax burden and reduce bloated transfer payments. Too many people are collecting benefits relative to those working and paying taxes.
via Europe’s Last Best Chance – Michael Boskin – Project Syndicate.
NY Fed Issues Mea Culpa That Nobody Saw at 6PM on Black Friday | ZeroHedge
The 3 big reasons the Fed had gotten it wrong:
- Misunderstanding of the housing boom. Staff analysis of the increase in house prices did not find convincing evidence of overvaluation (see, for example, McCarthy and Peach [2004] and Himmelberg, Mayer, and Sinai [2005]). Thus, we downplayed the risk of a substantial fall in house prices. A robust approach would have put the bar much lower than convincing evidence.
- A lack of analysis of the rapid growth of new forms of mortgage finance. Here the reliance on the assumption of efficient markets appears to have dulled our awareness of many of the risks building in financial markets in 2005-07. However, a March 2008 New York Fed staff report by Ashcraft and Schuermann provided a detailed analysis of how incentives were misaligned throughout the securitization process of subprime mortgages–meaning that the market was not functioning efficiently.
- Insufficient weight given to the powerful adverse feedback loops between the financial system and the real economy. Despite a good understanding of the risk of a financial crisis from mid-2007 onward, we were unable to fully connect the dots to real activity until 2008. Eventually, by building on the insights of Adrian and Shin (2008), we gained a better grasp of the power of these feedback loops.
[The author of the NY Fed report] then added that perhaps the biggest reason for the failure was “complacency,” with which I heartily concur, but to which I would also add hubris and stupidity.
via NY Fed Issues Mea Culpa That Nobody Saw at 6PM on Black Friday | ZeroHedge.