The CME Margin Notice That Has Everyone In a Tizzy | Kid Dynamite’s World

Last night the CME sent out a margin advisory. They do this all the time, changing margin requirements in different products, but this notice was different:

The notice was picked up (and spread, like financial news Herpes) by ZeroHedge, who predicted a plethora of margin calls on Monday, and of course, imminent Financial Armageddon. There is of course an alternative potential explanation……….the initial/maintenance ratios were previously greater than 1.0. They are being LOWERED to 1.0.

via The CME Margin Notice That Has Everyone In a Tizzy | Kid Dynamite’s World.

EconoMonitor : Last Days of Rome » Pentagon’s ‘War Over Future Wars’ Is Underway

Within the [US] Army, and inside the civilian leadership of the Defense Department, a higher-level debate over the shape of future threats also rages, with Army and Marine Corps stressing that large, ready-to-deploy ground forces will continue to be the backbone of American power, while the Navy and Air Force stress high-tech, “stand-off” capabilities like drones and missiles that risk fewer American lives and require fewer troops – and thus health care, pension and housing costs.

via EconoMonitor : Last Days of Rome » Pentagon’s ‘War Over Future Wars’ Is Underway.

Colin Twiggs: ~ What the US has done well in the past is hard, conventional battles with mechanized forces. Also intelligence and stand-off capabilities. Where they struggle is with wars like Vietnam, Iraq and Afghanistan. Knowing this, their enemies present few hard targets and draw them into long, energy-sapping occupations where they spend their time chasing shadows. Hopefully they have learned to avoid a repeat of their current situation.

Ex-Product Sketch | The Big Picture

There have been many cries to regulate or ban the existence of Sovereign CDS, both from the sovereigns that felt their nations under attack, and by the masses who see them as one of Satan’s investment bank tools designed to steal from the poor………

But there is a viable alternative. TMM would like to introduce their readers to the humble Bond Future. That long-standing, well-understood derivative that has provided liquidity, transparency and price discovery to bond markets in many countries for 40 years. Bond futures with deliverable bond baskets allow basis trading, speculation and hedging, without the idiosyncrasies of CDS contracts. But of course, futures markets aren’t that profitable for banks… well, you reap what you sow, right?

via Ex-Product Sketch | The Big Picture.

The End of Population Growth – Sanjeev Sanyal – Project Syndicate

What demographers call the Total Fertility Rate is the average number of live births per woman over her lifetime. In the long run, a population is said to be stable if the TFR is at the replacement rate, which is a little above 2.3 for the world as a whole, and somewhat lower, at 2.1, for developed countries, reflecting their lower infant-mortality rates.

The TFR for most developed countries now stands well below replacement levels. The OECD average is at around 1.74, but some countries, including Germany and Japan, produce less than 1.4 children per woman. However, the biggest TFR declines in recent years have been in developing countries. The TFR in China and India was 6.1 and 5.9, respectively, in 1950. It now stands at 1.8 in China, owing to the authorities’ aggressive one-child policy, while rapid urbanization and changing social attitudes have brought down India’s TFR to 2.6.

…. it is likely that world population will peak at nine billion in the 2050’s, a half-century sooner than generally anticipated, followed a sharp decline. One could argue that this is a good thing, in view of the planet’s limited carrying capacity. But, when demographic dynamics turn, the world will have to confront a different set of problems.

via The End of Population Growth – Sanjeev Sanyal – Project Syndicate.

Candidates Mold Economic Teams – WSJ.com

The Cain campaign, in addition to Mr. Lowrie, lists a handful of advisers who helped craft his plan for “Opportunity Zones.” The zones are designed to help distressed communities by offering lower tax rates to attract businesses and allowing more flexibility on rules such as the minimum-wage law.

via Candidates Mold Economic Teams – WSJ.com.

I have seen this tried before. The low tax rates or incentives attract industries that are labor intensive but not capital intensive. When the subsidies are later removed, many of the businesses move on. If you want them to stay, you have to create incentives for capital investment that cannot be easily re-located.

….Otherwise provide training and incentives for people to move to where the work is.

Leadership

“You wonder why leaders really want these jobs when they do not want to lead. And what is their risk? That Barack Obama will not get a second term? Or that Angela Merkel’s coalition might finally end up on the rocks? If they actually made the leap they might astound themselves. Because in the end, everyone in political life gets carried out — the only relevant question is whether the pall-bearers will be crying.”

~ former Australian prime minister Paul Keating as quoted in The Australian

Teaching ethics

While we are on the subject of humanity (Yueyue) in China, it occurs to me that we need to teach ethics not only to the Chinese but to many on Wall Street as well. Unfortunately teaching ethics is not as easy as teaching Mathematics — there is more of a cultural/religious context — but IMO every educational system should place as much emphasis on ethics as on the hard sciences. And ethics should be a compulsory subject in most university degrees — especially business and sciences.

It is a long time since I studied ethics but have never forgotten the outstanding example set by a handful of British Quakers more than a century ago. Some of their businesses have enjoyed tremendous success and are now household names in the UK — Cadbury, Barclays, Lever — demonstrating that ethics and (long-term) success are not strange bedfellows, but go hand in hand.

Some are simple examples of altruism like the model village William Lever built in 1899 at Port Sunlight to house workers from his soap factory.

Others showed how to behave when confronted with an ethical dilemma. Cadbury had opposed the 1899-1902 Anglo-Boer War in South Africa. His biscuit factory was in dire straits and about to go under when he received a huge order to supply British troops in South Africa. He now faced a moral dilemma: either go against his principles or go out of business and lay off his workers. He resolved the conflict by accepting the order — enabling him to keep the factory afloat and his workers from losing their jobs — but on the condition that he would only cover his direct costs. He refused to take a single penny of profit on the entire contract.

There are examples of altruism, self-sacrifice and moral courage from many nations and religions. Feeding students a steady diet throughout their education would go a long way towards ensuring that our next generation of leaders, both in politics and business, show more humanity and compassion toward their fellow man.

Toddler’s Death Stirs Ire in China – WSJ.com

“The most important thing for Chinese people right now is making money and pursuing their own interests,” said Jin Liang, deputy director of the Shandong Institute of Behavioral Science in eastern China. “Our education system doesn’t teach ethics. Environment is very important in determining people’s behavior, and right now Chinese culture is sick.”

Others have argued that the problem is largely a legal one. They point to a series of cases in which Chinese Good Samaritans have helped strangers only to be later blamed and sued.

The most famous such case occurred in Nanjing in 2007, when a young man named Peng Yu was sued after he escorted an elderly woman to the hospital after she had fallen and broken her leg. The court ordered Peng Yu to pay 40% of the woman’s medical bills, explaining that “according to common sense” he wouldn’t have helped her if he weren’t in some way responsible for her fall.

via Toddler’s Death Stirs Ire in China – WSJ.com.

Humanity seems to vary greatly between countries …. and sometimes within countries. I myself can only recall experiencing kindness when I lived in Africa, but at the same time would read news stories like the Cape Town woman whose car overturned on a country road, leaving her trapped inside with a broken leg and pelvis. Passersby dragged her free of the car before raping her and making off with her handbag.

If there was some way of measuring humanity in a country, on a scale of 1 to 10, I am sure that you would find a strong correlation between humanity, stability and economic prosperity.

Scandinavian countries would probably rank highest on such a scale. Interesting that, before introduction of a religion (Christianity) which emphasizes humanity toward your fellow man, their Viking ancestors would have ranked near the bottom. Perhaps there is hope for all of us.

Obama Announces Complete Drawdown of U.S. Troops From Iraq by Year’s End – ABC News

“Today, I can report that as promised, the rest of our troops in Iraq will come home by the end of the year,” the president [Obama] said. “After nine years, America’s war in Iraq will be over.”

via Obama Announces Complete Drawdown of U.S. Troops From Iraq by Year’s End – ABC News.

Doesn’t it just inspire you with confidence in the political system when battlefield decisions are made to coincide with the presidential election campaign — and enemies are notified of troop withdrawals two months in advance — so they can plan a “going away” party for your troops.

Keep it simple

The simpler it is, the clearer the message, the more successful you will be.

~ successful Brisbane Roar Football (Soccer) coach Ange Postecoglou on Sport Insiders

The same principles seem to apply to running a football team, a corporation or the national economy — which is why Herman Cain’s 9-9-9 plan shows a clear grasp of what is needed.