Time for 15 euro nations to throw in their cards

The cost of saving Europe is getting too high, and considering the direction the Eurocrats’ philosophy is taking, it’s better just to walk away.

One warning sign was the vehement opposition to the proles ever having a say in how their country or their continent is run.   Never mind that the Greek right wing had half the debt hidden with accounting trickery and derivatives so the public never had a say or notice that the debt was being run up that high.   They should just be stuck with the debt because the elites that want to enslave them say so.  That is the right wing thinking.

Personally, I emphatically agree with the “doctorine of odious debt” and strongly believe that it should be international law.   If somebody like a dictator runs up a huge tab without a mandate, I don’t accept that that there is any moral or ethical basis why the public should be bound by that evil collusion.

It needs to be held to situations where it is appropriate, and the banks colluding with a prior Greek government to run up a tab with no mandate, off the books, is well across the line.

Now another angle is that S & P is being condemned for threatening to downgrade even Germany and France.

S & P, Moody’s and Fitch should be condemned for not having already downgraded Germany and France.

These ratings agencies need to decide if they are in the public relations business or the ratings business.   If they are supposed to be publicists generating good buzz for everybody they should go work for Kim Kardashian and leave serious work to somebody else.

The traditional ineptitude of ratings agencies among other things makes market crashes worse as occurred in 2008.

In 2008 some seriously defective instruments that were given AAA ratings suffered serious losses.    Some of these packages of instruments were intentionally designed to fail and the banks selling them were shorting them at the same time.

Ratings should not be a rubber stamp.

But getting back to the recent story, the real news is not the threatened downgrades, but that the politicians and bureaucrats think that ratings agencies shouldn’t tell the truth because it might affect the markets.

God forbid a ray of truth might get through.

At the same time, half the financial press are writing on the impending market disaster while the other half write glowing nonsense about how the markets are certain to rise and we face eternal prosperity.  The direction that the politicians, bureaucrats and media are taking is Orwellian and I don’t like it.   Europe is regressing 80 years and the US is turning into the Republic of Americastan.

I take it the French have thrown veracity on the rubbish heap along with liberty, fraternity and equality.  The Germans have never espoused those values so I can’t accuse them of abandoning anything.

So there you have it.  If you are in favor of truth, justice and democracy you are an enemy of the Reich…er..European Union.   Framed that way, I know which side I’m on.

Footnote suggestion: start turning ratings hard instead of issuing them in inscrutable ways that look more like religion or astrology.

The European Union’s magic numbers were debt no more than 60% of GDP and deficit no more than 3%.   But that level will already cause significant debt stress.

The GDP is not the best figure to use.  As shown in the US, governments face significant resistance to raising taxes.  They also face significant resistance to reducing programs, any programs.  The result is often inertia.  That means that comparing the debt to the government budget is a more appropriate ratio.  The GDP is irrelevant unless the government can access more of it.  And which sounds more ominous, that the debt is 60% of GDP or that it is 240% of the annual budget?

But using GDP comparisons for a moment, as that is all that has been publicly developed, the idea that the 60%/3% should reflect a AAA rating is ridiculous.

The idea that a government is inherently a more reliable debtor is a dangerous misconception.   A government controls its’ own process in a way that no other debtor can.   A government can immunize itself from execution against assets and unceremoniously give you the heave ho.

Giving a government that is badly in debt a AAA rating because it is a government is incorrect.

If I were making the credit ratings I wouldn’t give a government with the 60%/3% debt ratios better than a BBB.

The US present debt and deficit? A BBB-…maybe. For any other country I’d put that in single or double B.

Have hard lines that result in automatic downgrades without debate, analysis or equivocating and it will help straighten things out.   There’s no need for a field that is mostly numbers to be all soft analysis.

Euro chicanery as ominous as any other sign

I’m sure everybody has noticed by now certain patterns that European politicians have used to disguise the lack of progress on their issues.

The mainstay approach of having a meeting, resolving nothing, then departing and declaring victory is getting really thin.

The announcement is followed with no specifics and further meetings are announced to work out the details of the non-deal when in fact the extent of the agreement is “we have agreed to solve the problem” but without any mechanics.

The second line of attack is, we’ve had a meeting, and we’ve decided that somebody else will solve our problem.  China will solve our problem.  Private investors will solve our problem.

That is not a plan, it is a hope for “deus ex machina”.

This form of salvation reminds me a lot of the old Aesop fable about mice who are being terrorized by a local cat.  So the mice have a meeting and they decide that the solution to the problem is that they will put a bell on the cat.   The reaction to this is quite favorable, until an old and wise mouse speaks up and says, the plan is fine, but who is to bell the cat?

In other words, a plan that can’t be implemented due to an insurmountable hurdle is as good as no plan at all.

China is predictably not interested and there is little incentive for them to get involved.  The lack of any attempt by Europe to take a serious run at its’ problems on its own makes it foolhardy to fund them.  They’ll just go through any money contributed and then when it is about to run out, start having meetings again to figure out what to do.  Giving money to Europe right now is about as constructive as putting your money in a pile and setting it on fire.

As for the private investors solution, that fizzled for predictable reasons.  There is little interest in European bonds now as it is.  The leverage plan is rather silly, because it insures only 20-30% of the value of bonds.  The statement that makes is in some ways worse than no insurance.  Invest in Europe and we guarantee you will get one fifth of your money back ! Woo hoo, sign me up.

The whole issue is that private investors are losing faith in government debt.  The theory that you will fix the problem by attracting back private investors is strained at best.

Trying to force banks to take on more government debt by increasing tier 1 capital requirements is dirty pool and there is a bit of a conflict of interest in the decision.  The irony is that the whole thrust of the problem is that tier 1 capital is arbitrarily defined and attributes a reliability to government debt that is without foundation.

Other dubious plans have come up.   An utterly bizarre plan from Germany involves putting together currency reserves to increase investor confidence.

So Germany alone would need to save 500 billion Euros under that proposal.

If there isn’t actual currency set aside, it’s just an accounting gimmick.

If currency is raised to set aside with bonds, then you increase the debt.

If you do set physical currency aside as a guarantee, you will decrease the liquidity in the system unless you print more Euros.   That will tend to cause deflation and stagnate markets.  Deflation will increase the value of existing debts.

If the idea is to print money to set aside as a guarantee, so that there isn’t a liquidity crisis, why not just simply print money without turning this into a dog and pony show.

So I am divided as to whether this latest from Germany is supposed to make no sense or whether it is supposed to be counterproductive.

The latest from Europe generally is, the ECB lends money to the IMF and then the IMF lends it out to Italy or Spain as the case may be.

Is John Cleese making European policy?

If Europe and the ECB can’t bail out Italy and Spain now, how does it assist to loan money through the IMF?  If they are providing the funds, how does adding a step with the IMF in the middle change anything?

If the idea is that the IMF is a better credit risk, then you have the ultimate issue that, if the debtor country stiffs the IMF, will it be Europe or the IMF that gets stuck with the tab?

That really is the issue.  If the IMF doesn’t have the money to loan, and the ECB doesn’t have the money to loan, how does this work? If the IMF and the ECB could fix the problem with their resources together, why not have the ECB put in some money and the IMF put in some money separately rather than taking weird roundabout steps?

If the money isn’t there for a bailout, it isn’t there.

There is an old expression about pulling oneself up by one’s bootstraps which would be appropriate, but it is a bit dated.

Here’s a more contemporary allegory: bees lifting a laptop:

http://www.youtube.com/watch?v=3AxIOtSjXyA

Mythbusters proves that bees can’t lift a laptop using basic principles of physics.

The basic myth of bees lifting a laptop has the same structure as supply-side and other right wing economics however.   It is possible with some sleight of hand to create the appearance that it can work but that isn’t enough to deliver.

It’s hard not to wince hearing some of the plans being floated in Europe these days.   When a “plan” is obvious balderdash, it has a prejudicial effect worse than having no plan.  A bunch of confusing bafflegab may reassure slow people but to those of us with IQs over 100 it looks incredibly desperate, like not only is there no plan but you’ve given up and are prepared to say things that are incoherent rather than say nothing at all if you need to stall for time.

Merkel and Sarkozy are the pioneers of the planless plan, where the real plan is to game the media to keep up market and consumer confidence without doing anything.   It’s too bad that Merkel is taking the lead in this, because she leads Germany and Germany has money to spare.   Sarkozy is at least ten times as smart as Merkel and far better at public relations.

Merkel and her bank friends are so awful that they make me feel sorry for Berlusconi.  Italy was in good shape and then there was a massive misleading press blitz about Italy’s finances and then ECB halved it’s support for Italy’s bonds in order to push Berlusconi out of power so that he could be replaced by an ECB/ Goldman Sachs puppet.

It is a supreme irony that with all of Berlusconi’s unethical connections and activities and more legitimate reasons to remove him than you can count on your fingers, that when he was finally removed from office, he was removed by foreign powers and bankers because he was a patriot who refused to sell out his country.

The tactics used against Italy suggest to me that those who would consolidate Europe now do not have the appropriate motives and it must not happen.

Europe has had years to work on the debt problem and they haven’t come up with a single good idea.  Germany vetos any suggestion that would solve the problems (e.g. print money).

The plan for Greece is doomed to failure for a variety of reasons, not least of which is that the yields on Greece’s bonds are over 30%.

If Greece’s full debt was unsustainable at 7% yields, can half of Greece’s debt be sustainable at 30% yields?  Do the math.  No way.  Greece is going to burn out and soon.

Greece should be allowed to default…because they are going to default.  Anything that anybody has to say on the subject is moot.

What needs to be the focus is, when is Greece going to default.

The unpopular answer for the politicians should be, as soon as possible and it should be carefully planned so the logistics can be worked out.

If more bailout funds are given to Greece, they will be spent.

Greece should be allowed to default, but the flip side of that is that the bailout funds would need to be given to Greece’s creditors to keep them afloat.

Wait, and the bailout funds will have been spent and we will be in the same mess but with fewer resources to address it.  Unfortunately politicians are averse to taking any immediate action that is unpopular, even if it is necessary and the cost/benefit is there.

 

 

Palin and Beck Orwellian

Some 30 years on in the right wing economic agenda, with nothing to show for it but disaster after disaster, and a steadily declining standard of living, we now hear from such luminaries as Palin and Beck that we need to exercise our “second amendment rights”- (i.e. kill our fellow citizens?) to have a revolution so that we can have…exactly the same policies as we have for the past 30 years that have led to nothing but failure and impoverished billions.
How it would be a revolution to take up arms to do what is little more than defending and furthering a corrupt existing order, I don’t know.  It is hard to see it as anything other than Orwellian doublespeak.
One of the more common delusions is of a “free market”.  The operational definition of “free market” seems to be an arrangement where privately owned businesses take great risks and if they make money by fair means or foul, they keep all of it, but if they run into trouble, they morph into socialists.   Proper regulation could avoid both ends of the problem.  The lack of appropriate regulation creates needs for bailouts and even more interference by government than if there had been an appropriate level of interference in the first place.
The right wing has been consistently preaching financial responsibility for 30 years while the left wing has been practicing it.   Put a democrat in power and the balance sheets usually tend to adjust quickly.   Put Republicans in and the finances spiral out of control.    But because they replace Democratic expenses that help people and give ordinary people jobs with far more expensive programs that center on killing people, the military, they consider themselves more responsible.
When Bush and friends left office, they had created a stimulus plan that was supposed to turn the country around.  The incoming Congress and President had little alternative but to ratify what the previous administration had already planned unless they were to stall and take more time for debate.  Obama has huge problems to deal with, most of which he inherited from the younger Bush.   Now a plan formulated under a Republican administration [yes, in consultation with a number of Democrats who are also guilty of it] is being rebranded as a Democrat abomination.    Never mind that 30 years of terrible decision making by mostly Republicans came to a head with the crisis, or that the Democrats were continuing policies arrived at by Bush and his appointees.    Of course the stimulus plan was a terrible idea with many Democrat (and Republican) backers, but rebranding it as a Democrat idea is pure fiction.
The key underlying problem with tea party types is exactly the same as the key problem with Stalinists.   Utopians of every flavour tend to follow a similar trajectory.
The first step is to have a simplistic world view and believe that if everybody adhered to this ideal that all conflict would magically dissipate and everybody would live in peace and happiness.
The second step is, because the utopian’s simple solutions never work, to create a mythical fall from grace and scapegoats.   The fall becomes due to women because Eve ate an apple, or Jews, or some other race or alleged conspiracy.   Utopians are generally fanatics.  Their reasoning goes that if everybody was on the same page, their system would work.   The system does not work, and therefore that is because not everybody is on the same page, not everybody is pure enough.   That leads to purges, threats of violence and an insistance that if only more people would follow the dogma everything would be fine.   The solution proposed is usually even more extreme than that which is already not working.    Decades of setbacks do not prove that the idea is refuted, they prove that the “wicked” have been getting in the way and only through purification can there be progress to the utopian ideal.
Utopianism seems to be more of a defect of the white race, the others don’t seem to get as confused or stay confused for as long.
Utopians tend not be great students of history.    There was a time when the economy was almost unregulated.   It was not a Utopia.  In the early Industrial Revolution the conditions were so bad that if not for the reforms in the early 20th century it probably would have been better if there had never been an industrial revolution at all.   Lack of regulation led to great boom and bust cycles, to the detriment of everybody, including most business owners.    The conditions were so horrific that Marxism gained a great deal of traction.   And if the majority of the population is subjected to those conditions again, Marxism or something like it will spring up again for the same reasons.   We have all the empirical evidence that we could ever need that blanket deregulation or lack of regulation is a disaster.
Utopians tend to not be good with facts or common sense.   Henry Ford was no Marxist, actually reputed to have been a Nazi sympathizer, but he realized that workers have to make enough money to buy products.   There is no use having an assembly line that makes cars if almost nobody has the resources to buy a car.  Notwithstanding his unsavoury politics, his economics is basic common sense: http://en.wikipedia.org/wiki/Fordism
A country without a middle class cannot have a thriving economy.   Yet eradicating the middle class and reducing the bulk of society to subsistence wages so they can’t buy anything but subsistence products is the primary objective of the right wing in western civilization since Reagan.
You see, the battle is not between left wing economics and right wing economics, it is between the “supply side” and Reaganomics people vs. Ford economics.  Ford economics built America and Reaganomics and supply side economics destroyed it.
There have been a number of Tea Party type movements in the past, with usually mixed results at best.  The Nazis were one such movement.  They put a guy like the new Glenn Beck in charge and that didn’t go so well.   The French did a little better but Robespierre got drunk on power and paranoia and after he took out the trash he started taking out everything else, including former allies.  Once people get a taste for doing things that way the genie doesn’t go back in the bottle.  Maybe the best outcome of such a movement was with Julius and Augustus Caesar, albiet again resulting in the appointment of a dictator.
Not really something to aspire to.  Is there anything wrong with going back to what worked?

At least she didn’t say that it was a tattooed black guy driving a white van

Something smells more than a little fishy about this tale about a woman and her fiance being chased by Mexican pirates: http://www.msnbc.msn.com/id/39564708/ns/us_news-crime_and_courts
It sounds like a bit of Susan Smith or Balloon Boy.    Wonder if he’s in a trunk at home or if they faked his death for the insurance.
Or a drug deal gone bad?
Shooting people dead doesn’t get you a hostage and no normal person is going to be carrying wads of cash under their wet suit, so what’s the motive to go after a couple of gringos on water scooters?   I wouldn’t think that the water scooters themselves are so expensive that the risk/reward would be there to get that kind of heat trying to pick off used water scooters.

What liberal media?

I think that I took the title for this entry from Frankel, but anyways I like it.
Fox is the most egregious offender as a transparent propaganda organ for the Republican Party- “All biased, all the time” would be a good slogan- but I can’t say much for the the other networks that are just sneakier about the same orientation.
Take for instance information on recent polls.   The impression given for a long time has been that the population is overwhelmingly against the Democrats and for the Republicans.   But when you look at the fine print, all along the Democrats have had an overwhelming advantage in public opinion.   This is then massaged and the sharp focussed numbers are changed into soft focus numbers with the prediction that the Republican voters are more dedicated and will show up to vote in greater numbers.
The whole point of the propaganda exercise is to make the soft focus numbers a self fulfilling prophecy.   People like to go with a winner, and if they think that they would be wasting their time backing a loser they are more likely to stay home.
It is also an attempt to appeal to the herd instinct, to convince enough people that are in the majority that they are actually in a very small minority that still supports Democrats so that they are more likely to question whether they are on the right side and more likely to go where they are told the herd is going.
The most surprising thing is that in spite of this campaign of smoke and mirrors the large majority of the population still aren’t buying it.
The headlines should be “Democrats Continue to Command Overwhelming Support Over Republicans” but instead are “Republicans Headed for Landslide Victory, Voters Fed Up With Democrats”.    But telling the truth would put the weight of the self-fulfilling prophecy in favor of the Democrats and probably assure a Democrat landslide victory.
Joseph Goebbels, the father of the modern right wing, would be proud.
I have to disagree with Rick Sanchez.  There are not enough Jews in the media.  Jews are traditionally liberal and moderate, except the ones in Isreal.  It would have been more constructive if he had turned that passion into something more constructive than taking on the ethnicity of other reporters and anchors.   For instance, when Ted Turner was around CNN was a serious news station.  Now it looks directionless.  It got away from the business model of being interesting, relevant and focussed.   Now you’re likely to see a major world event dealt with in 30 seconds followed by five minutes of some “human interest” story showing a dog chasing a frisbee.  The problem with CNN isn’t that it has competition, but that it has been watered down to crap [with some deeper oriented programs that will only get a PBS audience share].  There still isn’t any competition for Ted Turner’s CNN.
Too often the media just parrot whatever everybody else is saying uncritically.  Liberal policies are scrutinized minutely- as they should be- while the right wing usually gets a free ride.

Palin and Tea Party need to work on credibility

In a lot of ways the election of a few tea party members could enhance Obama’s re-election campaign.
The first problem is that they have hamstrung themselves for actually dealing with any problems, because it will be impossible for them to make deep cuts without doing anything offensive.  If they actually get a majority of Republicans in either house they’ll have to either become part of the system or else put forward something like a bill to end medicare.
A bigger problem is that some of the tea party leaders are attention hoes and will say or do anything to get themselves on T.V.    That will inevitably be disasterous for the Republicans.   I bet a lot of Republicans are secretly hoping that the Democrats take Delaware so they don’t have to go around with bags over their heads.
Palin has to watch herself as she got a reputation for standing by principles even when against her best interest, although I’m not sure that extended beyond more than declining one bridge.
Now with her tieing her fortunes to the Tea Party she’s in danger of becoming a cartoon.
I’d also think more of her if she didn’t seem so committed to politics ahead of everything else.   It would be nice for her to tell Bristol “Marry the father of your child.  You love him, he loves you and you want a family together, so do it and don’t let my career stop you from doing what is right.”
I get the distinct impression that something like the opposite happened.   I get the impression that Palin would like to pack around her kids to show off with the political travelling circus.    I think that a politician that doesn’t put politics second is probably too dangerous to elect.    If the handling of your own family is about what is expedient for your career, how can you be trusted with the rights of strangers?
Of course the effect of every conflict gets multiplied when it is treated as news and as soon as you get famous you get surrounded by rats that will trot out your conflicts for their benefit, sometimes adding a bit of spin to make things look more exciting.   Part of the solution to that is, don’t use your kids as props.
There are also issues of legacy and game plan.   The Tea Party doesn’t have a game plan and can’t have any legacy.  The plan is to get into power and then figure things out.
But that is what everybody does, only they didn’t used to call it “tea party”.    You can probably count on one hand the number of politicians that went to Washington to raise their own taxes, run epic deficits and create all the other disasters there.    Everybody starts by running on change and then when they get to Washington they run on their experience.    The paradox is that if you run on change but that is all fairy tale change, when you get to office you can’t actually change anything. The only paths to change are unpopular and the only way that they can work is with bipartisan support, otherwise the public elect whoever will give them fairy tales of a utopia achievable without any hard decisions and who bring in pork to keep or create local jobs.
The tea party can’t change anything because everybody has been tea party by one name or another and then when elected and have to do more than emit sound waves they become the establishment.
Change within the existing system can only happen through establishment types that actually know the problems banding together and making decisions that otherwise would be political suicide.
The alternative is sinking in directionless dithering into marginal relevance, just like every other empire that ruled the world for a while.

West Memphis Three again

Further to my last entry, it may be that evidence of tire tracks or drag marks got obliterated by the cretins that came on the crime scene, but one would think that even the investigating officers there wouldn’t be that thick.
Unless the perp was really close by the options that are obvious are that the victims would have either walked, been dragged or driven, as an eight year old weighs enough that the perpetrator wouldn’t be able to carry even one very far unless he was amazingly fit.  Walking seems unlikely in the circumstances, with search parties out looking for them and all.
But if there was no evidence of bringing them in, the next thing you look at is who had a boat or access to a boat and if any boats were stolen in the relevant time frame.
The strength of the river current would also be important because it would reflect on the strategy of the perpetrator.   The ideal stealth strategy would be to be able to use no engine power and drift with the current.
A boat would help explain one of the unusual features of the scene, the clothing wrapped around sticks that were stuck into the bank.  If the perpetrator doesn’t want to set foot on the bank, which could leave a clue, but doesn’t want clothing to float downstream to get attention (possibly right ahead of himself), then he doesn’t really have a lot of options other than wrapping it around something fixed.   If he throws it up on the bank it may attract attention too quickly and the anti-forensics effect of putting the clothing in running murky water would be lost.
The potential suspect that jumps out as the first person I would have put on the polygraph is the junior probation officer that was somehow at the crime scene that said something like “It looks like Damien Echols finally killed somebody”.   If he knew anything about the history of Damien Echols, he would know that it would be highly remote chance of that being true.  He did however successfully sidetrack the investigation for 17 years so far.  And why was he there?  The last thing that you would think that a cop would want would be some wanna-be who is a probation officer for minors trampling over your crime scene and offering unsolicited opinions.
There was no appropriate reason why a probation officer for minors would be hanging out at a murder scene.  That job description is however the ideal job positon for someone who prays on children- a position where vulnerable children who may have become accustomed to abuse are presented with an authority figure that they have to obey or receive adult-like consequences.  Really the ideal position for somebody that preys on children.
For a perpetrator to insert himself into an investigation and even try to misdirect an investigation is not unheard of.
I can’t say that he’d good for it, but I’d really like to know if he has any alibi, or lived in the area, or had access to a boat.  I would have given him the same initial attention that they gave Echols.    A big difference now though is that the perpetrator has had 17 years to screw up again.   A person that could do that, or who couldn’t not do that, has done something else, probably lots of things, and probably been caught for some.   Not infrequently when there is a wrongful conviction, if the actual culprit is discovered it is somebody with a long history of problems with the law.