Best of Both Worlds

Colonized by bankers

2012-01-28T22:39:00.001Z

This New York Times article comparing Wales and Greece is very interesting. One country is in a currency union that works, and one isn't. Paul Krugman has a quibble with the intellectual origins of the need for fiscal transfers in a currency union, but there's another point worth mentioning. Let's suppose there was a country in a currency union and that this country had a number of banks headquartered there, banks which engaged in reckless lending, grew far beyond a size that the country could fund or sustain, and indeed beyond a size that the country could bail out when things go wrong. In a proper currency union, the cost would be shared among all the members.

Now that's not Wales, which is why it's not the best example for studying the deficiencies of the Eurozone. Instead, it's Scotland. Because Edinburgh is the home of both Royal Bank of Scotland and Bank of Scotland, which form the core operations of the two banking groups that got into so much trouble in 2008. But the UK taxpayer -- not the Scottish taxpayer -- bore most of the cost of cleaning them up. On the other hand, a former member of the sterling area let its home-grown banks grow into budget-busting disasters. That would be the Republic of Ireland, but the Eurozone has stuck the Irish taxpayer with the entire bill. That, as much as the need for fiscal transfers to cope with structural decline -- as in Wales -- is absent in the Eurozone.

Shakespeare never wrote about a King Leo

2012-01-26T17:45:00.001Z

Time Magazine, non-US editions cover, Feb 6, 2012.

One trick pony

2012-01-24T19:40:00.001Z

Charles Krauthammer on Fox News on Newt Gingrich’s lead in the Florida polls:

If you look at the swing in the electorate in Florida, it’s just amazing these mood swings. Two weeks ago, Romney was up by 20 over Gingrich and now it looks as if he’s down by ten. That’s a 30-point swing. If you get that in a patient, you pull out the lithium.

The only news here is that he's now turning his constant diagnoses of mental illness in liberals on other conservatives. A psychiatrist would know the word for when the syndrome finally starts to turn in on itself.

Dedicated to the doctor, an ingenious combination of My Little Pony and Nirvana.

The curse of Romney

2012-01-24T19:25:00.002Z

Mitt Romney, countless times: Europe isn't working in Europe, it sure as hell won't work here in America.

Reuters news: ZURICH/LONDON, Jan 24 (Reuters) - Swiss-based oil refiner Petroplus is filing for insolvency, putting over 2,000 jobs across Europe at risk, after it defaulted on $1.75 billion of debt.

Europe's largest independent refiner by capacity has been teetering since its lenders restricted credit late last year, a victim of thin refining margins and high debt that was a result of its private equity-backed business model.

The Bain Capital model isn't working in Europe.

The Tsars have learned nothing and forgotten nothing

2012-01-23T15:20:00.000Z

Just over 30 years after helping create Al Qaeda by getting sucked into a war in Afghanistan, the Russians are on the same slippery slope again:

MOSCOW (AP) — Russia has signed a contract to sell combat jets to Syria, a newspaper reported Monday, in apparent support for President Bashar Assad and open defiance of international condemnation of his regime's bloody crackdown. The respected business daily Kommersant, citing an unidentified source close to Russia's Rosoboronexport state arms trader, said the $550-million deal envisions the delivery of 36 Yak-130 aircraft. A spokesman for Rosoboronexport refused to comment on the report.

If confirmed, the deal would cement Russian opposition to international efforts to put pressure on Assad's regime over its attempts to snuff out the country's uprising. The U.N. says more than 5,400 people have died over 10 months. The report of the sale comes the same day that Human Rights Watch called Russia's backing of the Syrian regime "immoral."

Hopefully the other players in Syria -- not entirely dissimilar from the other players in Afghanistan -- are not as stupid.

Magical taxi drivers

2012-01-20T04:05:00.002Z

Actual quote from the European Central Bank's Man in Dublin for the Irish ~~extortion~~ bailout money --

“My taxi driver from the airport was very, very informed, I must say. Very, very informed.”

So the people telling Ireland that it has to keep paying off the debts of insolvent banks get their validation from ... the taxi driver on the way in the airport. These are Tom Friedmans put in charge of something important!

Pay those royalties

2012-01-19T21:19:00.000Z

The Southern Republican Leadership Convention in Charleston South Carolina is using U2's Elevation as the departing/introducing music between speakers, and Rick Santorum got Peter Gabriel's Sledgehammer as his intro song.

Get Halifax on the other line!

2012-01-19T02:43:00.000Z

So the big right-wing talking point on the collapse of the Keystone Pipeline from Alberta to the USA is that now "Canada" will sell all that oil to "China" (we use the quotes because discussions of the oil market tend to take a bizarrely centralized view of decision-making) --

A Republican Hill staffer sent the report [of Obama-Harper phone call re the pipeline] out this evening with the subject line: “Get China on the other line!”

There's just one problem. One nearby customer that Canada currently doesn't have for Canadian oil is ... Canada! As acknowledged by PM Stephen Harper in an interview with CBC 2 days ago:

MANSBRIDGE: All right. Last point on this whole issue of diversification to foreign markets: there are some people who are puzzled by the fact that a good chunk of Canada itself is still dependent on foreign oil, whether it's Atlantic Canada or Quebec, whether it comes from the North Sea, depleting resources there, or from the Middle East, vulnerable oil markets as you've already just suggested. Does it not seem odd that we're moving oil out of Western Canada to either the United States, markets in the United States, or new markets to Asia, when a good chunk of Canada itself does not have domestic oil?

HARPER: Well, look, Peter, on a certain level, I agree with you. It does seem odd, and I do think there are people out there in the marketplace looking at dealing with that particular sensitivity or insecurity. That all said, the fundamental basis of our energy policy in this country is essentially market driven. You know, we made the switch some 25, 30 years ago, and it's served the country well. As a market-driven supplier, we're now the only — in the developed world and in the stable world — we're really the only supplier that is secure and is increasing its production. So I think it's served the country well. It's served government revenues well. It's served creation of jobs well. But it is fundamentally a market-based decision. We don't dictate pipelines go here or there.

The more general issue here is that conservatives gleefully speculating that oil that would otherwise have gone through this pipeline will now go to China seem to have ignored the minor issues of distance and oceans. For one thing, to even get that Alberta oil to the point where it can be exported, there will have to an, er, pipeline, and one facing at least as many environmental challenges as Keystone. In short, given the difficulties of moving oil over land, that oil in Alberta is going to have to be sold to some place relatively close to Alberta. And it's not going anywhere while that market is being figured out.

Costa Concordia

2012-01-18T21:32:00.000Z

Superb picture sequence from Corriere della Serra (from which much of the overseas reporting on the cruise ship crisis appears to be borrowed).

No, nothing strange about the world weather at all

2012-01-18T15:36:00.000Z

Kuwait News Agency:

He [state meteorologist] noted that the temperature will drop sharply, as it would be the lowest since the beginning of the winter season this year; expected to drop to below-zero Celsius in many areas on Saturday night. "Sunday it will be freezing cold," Karam said. Karam expected the exposed agricultural crops to frost in this period.

It depends what the meaning of "success" is

2012-01-17T15:58:00.000Z

Saudi Press Agency:

Riyadh, Safar 23, 1433, Jan 17, 2012, SPA -- A mock hijacking Airbus 320 plane test with 130 passengers and 12 navigators on board was conducted today at Alhsa airport, eastern Saudi Arabia, a security spokesman of the Ministry of Interior said. The spokesman added that the test was successfully implemented.

Bavaria is motoring

2012-01-15T03:01:00.001Z

There's a huge degree of cognitive dissonance involved in being a Republican candidate for US President and of course many examples that could be picked out, but here's a strange one from Saturday. Mitt Romney in South Carolina, with Governor Nikki Haley, Senator John McCain, and Moustache of Doom John Bolton on the podium. Video links to C-Span, each quote within a minute of the click.

[link, 17m] Europe isn't working in Europe, it sure as heck won't work here!

[link, 47m] You're making BMWs here and selling them around the world!

UPDATE: Mitt's quote is also discussed today by Nicholas Kristof, who however probably doesn't do his credibility any good with a Paris dateline.

Eurozone Swot

2012-01-14T15:58:00.004Z

Standard and Poors, finally having hit "Publish" on that ratings downgrade that was ready 2 months ago --

WHY WAS IRELAND THE ONLY SOVEREIGN AMONG THE SO-CALLED "PERIPHERY" NOT
DOWNGRADED?

We have not adjusted our political score backing the rating on Ireland. This reflects our view that the Irish government's response to the significant deterioration in its public finances and the recent crisis in the Irish financial sector has been proactive and substantive. This offsets our view that the effectiveness, stability, and predictability of European policymaking as a whole remains insufficient in addressing the deepening financial crisis in the eurozone. ... All other things being equal, we view the government's fiscal consolidation plan as sufficient to achieve a general government deficit of about 3% of GDP in 2015. In our view, there is currently a strong political consensus behind the fiscal consolidation program and policy implementation so far has been extremely strong.

In our view, Ireland has the most flexible and open economy among the "periphery" sovereigns. We believe that Ireland's economic adjustment process is further advanced than in the other sovereigns currently experiencing market pressures. This is illustrated by the 25% depreciation in the trade-weighted exchange rate since May 2008 and Irish exports growth contributed positively to the muted Irish economic recovery in 2011. However, in our view this also leaves the Irish economy and, ultimately, the Irish government's fiscal consolidation program susceptible to worsening external economic conditions, which is reflected in our negative outlook on the rating.

Poster from Wikipedia.

Needs Man-Bag

2012-01-14T02:59:00.000Z

These high-level meeting photographs are always a little stilted, and the good digital quality doesn't do anyone any favours, but what on earth does David Cameron have rammed into his right breast pocket as he strolls with Saudi Crown Prince Nayef during their meeting in Riyadh yesterday?

Photo: Saudi Press Agency.

Heritage Foundation allows domestic politics to affect index of economic freedom

2012-01-12T03:11:00.004Z

According to the Heritage Foundation annual Index of Economic Freedom (WSJ summary), the USA became less free last year. Now one general problem with this index is that it because it uses government spending and deficits as one component of the index, just about any country is bound to become less free during a recession, as once-favoured Ireland found out before. But anyway, why exactly did the US become less free in 2011? It had a lot to do with the "Rule of Law" rating --

Property rights are guaranteed, and the judiciary functions independently and predictably. Serious constitutional questions related to government-mandated health insurance have been under consideration in the courts. Corruption is a growing concern as the cronyism and economic rent-seeking associated with the growth of government have undermined institutional integrity.

In other words, none of the institutions associated with rule of law have changed at all, but there's a legal challenge to health care reform, and, er, Solyndra! In fact, they can't produce a shred of evidence that cronyism has gotten any worse over the last few years: does anyone remember the contracting for the Iraq war? Not at Heritage, apparently. So what's supposed to be a quantification based on some rigorous underlying methodology is just a year of Fox News fulminations turned into a downward adjustment of last year's number. The final irony: that government mandated health insurance that has reduced freedom simply by virtue of being challenged in the courts was originally the idea of the ... Heritage Foundation!

By the way, in Ireland (#9) according to Heritage, "corruption is not regarded as a serious problem." They just can't give up on the Tiger.

For future reference

2012-01-10T19:16:00.000Z

That's US House Majority Leader and fire-breathing Republican hawk Eric Cantor with Saudi King Abdullah's son Abdulaziz in his capacity as Saudi Arabia's Deputy Minister for Foreign Affairs. Just to have handy the next time an "outrage" is being manufactured about connections to Saudi Arabia.

Coming soon to the pages of the Daily Mail

2012-01-10T18:53:00.000Z

Media Matters for America: Right-wing media figures are distorting a passage in the just-released book, The Obamas, by New York Times correspondent Jodi Kantor, to suggest Michelle Obama harbors antipathy toward "white Irish Catholics."

All the official photos from their great visit to Ireland.

America not a big college town

2012-01-10T18:06:00.001Z

It's bizarre that not only does Rick Santorum keep saying abrasive and offensive things, but that there's a pool of willing defenders available when he gets criticized for it. Here we have National Review's Patrick Brennan doubling down on Santorum's explanation of why the Catholic Church child sex abuse scandals happened in Boston:

[Santorum] On the Catholic Church’s abuse scandals: ‘Priests, like all of us, are affected by culture. When the culture is sick, every element in it becomes infected. While it is no excuse for this scandal, it is no surprise that Boston, a seat of academic, political, and cultural liberalism in America, lies at the center of the storm.’

[Brennan] It is hardly “terrible” to say that a culture that produces pedophiles, and the priests who themselves become pedophiles, must be somehow “infected.” That explanation does not provide, as Santorum notes, any excuse for the horrific crimes committed, but his statement isn’t only unobjectionable, the best evidence suggests that it’s actually accurate. Though Santorum’s comment on Boston is unsubstantiated, it isn’t offensive, and the only significant study of the causes of the Catholic Church’s sexual-abuse crisis so far, released in May 2011 by the John Jay College of Criminal Justice, indicates that he was roughly correct otherwise. To quote:

Social and cultural changes in the 1960s and 1970s manifested in increased levels of deviant behavior in the general society and also among priests of the Catholic Church in the United States. Organizational, psychological, and situational factors contributed to the vulnerability of individual priests in this period of normative change.

So Brennan refudiates Santorum's specific reference to Boston's culture with a quote that makes no reference whatsoever to Boston; the issue is not Brennan's acknowledgement that the Boston segment is unsubstantiated: it was Santorum's core thesis about why the abuse happened --proof that liberal culture corrupts: the scandal is centered in the most liberal city..

The fact is, the Santorum quote is an embarrassment left over from an already abandoned battlefield, as the evidence has mounted over the years that cases of abuse long pre-date the 1960s. And regarding culture, it was the hierarchical and insular culture of the Church, and codes of silence in the urban Irish and Italian neighbourhoods that were once its base, which formed the toxic brew of the scandals. But if you want to talk about Boston culture, how about a mention for Harvard Law's Mary Ann Glendon, who defended the Mexican child abusing priest and fraudster Marcial Maciel Degollado when scandals surfaced around him in 2002?

Of course, one way to avoid the contaminating effects of an academic culture like Boston is to go to university in a small rural college town with real American steel and mining community values, e.g. State College, Pa. Nothing bad could ever happen there, right?

Moment of clarity

2012-01-09T20:56:00.000Z

The repressive Syrian Baathist regime -- with 5000 deaths to its name during the recent protests, and counting -- finds out who its friends are when the Russian Navy pops in for a visit.

Photo issued by Syrian News Agency.

Nought's had, All's spent

2012-01-09T17:51:00.001Z

A few lines from the Swiss National Bank document dump today which precipitated the resignation of the chairman, Philipp Hildebrand; they concern the financial dealings of his wife Kashya with the initial focus having been on her speculative transactions in dollars when the SNB was about to cap the franc rate against the dollar:

[notes of their private banker] Kashya mentioned that she may look at buying put options on gold soon i.e. when the time is right ... unfortunately Kashya won't be around on that date (dinner invitation) as she will be in Dubai attending some art business of her own ...

[email from her to the private banker] "Dear Felix, as discussed we would like to get our dollar FX exposure up to 50 percent in our account ... kind regards, Kashya" ...

[philipp finds out about the currency trade and blocks it] "PS Kashya sorry about that but currencies really are a special case here"

Sunrise, Sunset

2012-01-07T19:24:00.001Z

The New York Times reports on Denis O'Brien and, separately, Sean Quinn. You wouldn't guess from the NYT articles that if you did a popularity poll in Ireland with just the two men in it, Quinn would still win.

People are too expensive

2012-01-06T03:00:00.002Z

A Wall Street Journal editorial organized around the theme that pesky "entitlements" (pensions and health care for old people) are squeezing the military budget --

Part of the problem is that military personnel costs are exploding on pace to exceed the entire defense budget by 2030, according to Andrew Krepinevich of the Center for Strategic and Budgetary Assessments. It's hard to make the political and moral case to reduce benefits for veterans and soldiers, but here's where Mr. Panetta could show mettle on Capitol Hill, especially by reforming military health care. The bulk of any defense budget is better spent on equipment, training and research.

Note that the current military healthcare system -- the base hospitals and Veterans Administration -- is actually a model of efficient government-provided free healthcare. So what they mean by "reform" is dumping soldiers into the free-for-all of the private insurance system. Maybe as a concession, being in a war will not count as a pre-existing condition. Until the robot army ("equipment") renders actual people unnecessary.

Image: Robocop poster via Wikipedia

Also in the Suddenly More Accountable Europe file

2012-01-05T15:57:00.000Z

It may be only in Germany that you'd get saturation coverage of a somewhat convoluted scandal involving the federal President and of the Brand-Perry breakup in the same newspaper, but that's Bild for you. Three cheers for Bild.

Gnomes

2012-01-05T15:49:00.000Z

Among the news stories that should be getting more attention is the case of Swiss Central Bank governor Philipp Hildebrand and the currency trades of him and his art-dealer wife. It's a tough case in which to pick sides because on the one hand, Mr Hildebrand has been extremely vigorous in reining in Swiss banks, but on the other hand, there's been a culture of impunity at central banks worldwide: the institutions that were supposed to be in charge of financial stability in the run-up to 2008 and yet which have seen the least change in personnel since then despite their massive failing in that regard. So if a sacking has to come due to dodgy personal deals of an otherwise good central banker rather than for incompetence of all the others still in their jobs, it's rough justice.

We'll also be following up to see whether the Swiss media view this as a homegrown failing or rather as due to bad habits picked up from working for New York hedge funds and marrying foreigners -- both of which apply to Mr Hildebrand.

Frankfurt Follies

2012-01-05T02:58:00.003Z

From Irish Department of Finance, the 2011 and 2010 budget outcomes with and without the "banking measures" i.e. the Eurocrat requirement that Ireland make payments to bondholders in insolvent banks. 9 billion euro here and 9 billion euro there, and pretty soon you're talking about real money.