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Archive for December, 2010|Monthly archive page

The Great American EconoSongbook of 2010

In Financial Engeneering, Financial Markets, Health and Environment, Law & Regulations, National Economic Politics, Philosophy, Views, commentaries and opinions on 10.12.10 at 17:58

Verusplus.com is putting their final touch on their “Holiday Songbook 2010,” and has just released another econoparody – this time it’s about foreclosures, mortgage securitization and (of course) banks.  The new song is a re-write of the classic “Oh Holy Night-” The versusplus version is called “Oh Robo-ly Night.”

“Our Might! We enshrine – Our right to be elephantine.”

http://www.versusplus.com



The versusplus.com 2010 HOLIDAY SONGBOOK continues with ROBO-‘LY RIGHT, an econoparody of “O Holy Night.”

Words by Placide Cappeau/Music by Adolphe Charles Adam/Translated from French to English by John Sullivan Dwight.

“ROBO-‘LY RIGHT” is also part of the versusplus.com operetta SONG OF THE ROBBER BARON, and introduces the Robber Baroness.

Download the “ROBO-‘LY RIGHT” song from iTunes (US): http://itunes.apple.com/us/album/robo-ly-right-single/id408225897

Watch “ROBO-‘LY RIGHT” on versusplus.com: http://versusplus.com or http://versusplus.com/roboly.html (with parody lyrics)

Watch “ROBO-‘LY RIGHT” on YouTube: http://www.youtube.com/watch?v=upPp1kNJdRI

More great econosongs at iRock.

IMF Put Irish Bailout On Hold

In Financial Markets, International Econnomic Politics, Law & Regulations, National Economic Politics, Quantitative Finance on 10.12.10 at 16:54
The International Monetary Fund (IMF) has decided to postpone its approval of the Irish bailout until its been approved by the Irish parliament – Dàil – hopefully after the debate next Wednesday, an IMF spokesperson says in a short  statement issued today.
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“Assuming parliamentary support for the package, the Managing Director could recommend approval by the IMF Executive Board of the proposed €22.5 billion IMF loan as early as December 16.”
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The International Monetary Fund


The Government of Ireland decided yesterday to table a motion on the EU-IMF Financial Assistance Program for Ireland in the Irish Parliament (Dáil). The vote on this motion is scheduled for Wednesday, December 15, 2010. Today the IMF has issued the following statement:
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“The authorities have informed us that while parliamentary approval of the EU-IMF support package is not legally required, the Irish Government has put the motion before parliament to strengthen political support for the agreement.  In deference to Ireland’s parliamentary process, the IMF has decided to postpone consideration by its Board of the proposed loan under the Extended Fund Facility until after the debate. Assuming parliamentary support for the package, the Managing Director could recommend approval by the IMF Executive Board of the proposed €22.5 billion IMF loan as early as December 16.”

“We welcome the first implementation measures of the 2011 budget – stipulating the fiscal consolidation path and important reform measures involved in the program – have recently been passed by the Irish Parliament, confirming Ireland’s strong commitment to the program and the policies involved.”

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Julian Assange’s Letter of Defence

In Financial Markets, Health and Environment, International Econnomic Politics, Law & Regulations, National Economic Politics, Philosophy, Technology, Views, commentaries and opinions on 07.12.10 at 18:08

WikiLeaks founder Julain Assange was arrested in London Tuesday after Swedish police issued an international arrest order for Assange based on the rather loose sex-charges from earlier this year. Assange, who has been “Americas Most Wanted” for a week, in hiding when his family and children received death threats, has just released a letter in which he asks for protection – not prosecution.

“WikiLeaks has a four-year publishing history. During that time we have changed whole governments, but not a single person, as far as anyone is aware, has been harmed. But the US, with Australian government connivance, has killed thousands in the past few months alone.”

Julian Assange


“People have said I am anti-war: for the record, I am not. Sometimes nations need to go to war, and there are just wars. But there is nothing more wrong than a government lying to its people about those wars, then asking these same citizens to put their lives and their taxes on the line for those lies. If a war is justified, then tell the truth and the people will decide whether to support it.”

The letter from WikiLeaks is titled; “Don’t shoot messenger for revealing uncomfortable truths,” with the sub-title; “WIKILEAKS deserves protection, not threats and attacks.”

It’s just published at the website of the newspaper The Australian.

recommended read. Here it is:

IN 1958 a young Rupert Murdoch, then owner and editor of Adelaide’s The News, wrote: “In the race between secrecy and truth, it seems inevitable that truth will always win.”

His observation perhaps reflected his father Keith Murdoch’s expose that Australian troops were being needlessly sacrificed by incompetent British commanders on the shores of Gallipoli. The British tried to shut him up but Keith Murdoch would not be silenced and his efforts led to the termination of the disastrous Gallipoli campaign.

Nearly a century later, WikiLeaks is also fearlessly publishing facts that need to be made public.

I grew up in a Queensland country town where people spoke their minds bluntly. They distrusted big government as something that could be corrupted if not watched carefully. The dark days of corruption in the Queensland government before the Fitzgerald inquiry are testimony to what happens when the politicians gag the media from reporting the truth.

These things have stayed with me. WikiLeaks was created around these core values. The idea, conceived in Australia, was to use internet technologies in new ways to report the truth.

WikiLeaks coined a new type of journalism: scientific journalism. We work with other media outlets to bring people the news, but also to prove it is true. Scientific journalism allows you to read a news story, then to click online to see the original document it is based on. That way you can judge for yourself: Is the story true? Did the journalist report it accurately?

Democratic societies need a strong media and WikiLeaks is part of that media. The media helps keep government honest. WikiLeaks has revealed some hard truths about the Iraq and Afghan wars, and broken stories about corporate corruption.

People have said I am anti-war: for the record, I am not. Sometimes nations need to go to war, and there are just wars. But there is nothing more wrong than a government lying to its people about those wars, then asking these same citizens to put their lives and their taxes on the line for those lies. If a war is justified, then tell the truth and the people will decide whether to support it.

If you have read any of the Afghan or Iraq war logs, any of the US embassy cables or any of the stories about the things WikiLeaks has reported, consider how important it is for all media to be able to report these things freely.

WikiLeaks is not the only publisher of the US embassy cables. Other media outlets, including Britain’s The Guardian, The New York Times, El Pais in Spain and Der Spiegel in Germany have published the same redacted cables.

Yet it is WikiLeaks, as the co-ordinator of these other groups, that has copped the most vicious attacks and accusations from the US government and its acolytes. I have been accused of treason, even though I am an Australian, not a US, citizen. There have been dozens of serious calls in the US for me to be “taken out” by US special forces. Sarah Palin says I should be “hunted down like Osama bin Laden”, a Republican bill sits before the US Senate seeking to have me declared a “transnational threat” and disposed of accordingly. An adviser to the Canadian Prime Minister’s office has called on national television for me to be assassinated. An American blogger has called for my 20-year-old son, here in Australia, to be kidnapped and harmed for no other reason than to get at me.

And Australians should observe with no pride the disgraceful pandering to these sentiments by Julia Gillard and her government. The powers of the Australian government appear to be fully at the disposal of the US as to whether to cancel my Australian passport, or to spy on or harass WikiLeaks supporters. The Australian Attorney-General is doing everything he can to help a US investigation clearly directed at framing Australian citizens and shipping them to the US.

Prime Minister Gillard and US Secretary of State Hillary Clinton have not had a word of criticism for the other media organisations. That is because The Guardian, The New York Times and Der Spiegel are old and large, while WikiLeaks is as yet young and small.

We are the underdogs. The Gillard government is trying to shoot the messenger because it doesn’t want the truth revealed, including information about its own diplomatic and political dealings.

Has there been any response from the Australian government to the numerous public threats of violence against me and other WikiLeaks personnel? One might have thought an Australian prime minister would be defending her citizens against such things, but there have only been wholly unsubstantiated claims of illegality. The Prime Minister and especially the Attorney-General are meant to carry out their duties with dignity and above the fray. Rest assured, these two mean to save their own skins. They will not.

Every time WikiLeaks publishes the truth about abuses committed by US agencies, Australian politicians chant a provably false chorus with the State Department: “You’ll risk lives! National security! You’ll endanger troops!” Then they say there is nothing of importance in what WikiLeaks publishes. It can’t be both. Which is it?

It is neither. WikiLeaks has a four-year publishing history. During that time we have changed whole governments, but not a single person, as far as anyone is aware, has been harmed. But the US, with Australian government connivance, has killed thousands in the past few months alone.

US Secretary of Defence Robert Gates admitted in a letter to the US congress that no sensitive intelligence sources or methods had been compromised by the Afghan war logs disclosure. The Pentagon stated there was no evidence the WikiLeaks reports had led to anyone being harmed in Afghanistan. NATO in Kabul told CNN it couldn’t find a single person who needed protecting. The Australian Department of Defence said the same. No Australian troops or sources have been hurt by anything we have published.

But our publications have been far from unimportant. The US diplomatic cables reveal some startling facts:

► The US asked its diplomats to steal personal human material and information from UN officials and human rights groups, including DNA, fingerprints, iris scans, credit card numbers, internet passwords and ID photos, in violation of international treaties. Presumably Australian UN diplomats may be targeted, too.

► King Abdullah of Saudi Arabia asked the US to attack Iran.

► Officials in Jordan and Bahrain want Iran’s nuclear program stopped by any means available.

► Britain’s Iraq inquiry was fixed to protect “US interests”.

► Sweden is a covert member of NATO and US intelligence sharing is kept from parliament.

► The US is playing hardball to get other countries to take freed detainees from Guantanamo Bay. Barack Obama agreed to meet the Slovenian President only if Slovenia took a prisoner. Our Pacific neighbour Kiribati was offered millions of dollars to accept detainees.

In its landmark ruling in the Pentagon Papers case, the US Supreme Court said “only a free and unrestrained press can effectively expose deception in government”. The swirling storm around WikiLeaks today reinforces the need to defend the right of all media to reveal the truth.

Julian Assange

Editor-in-chief of WikiLeaks

Related by The Swapper:

WikiLeaks: The Diversion of A Decade?

In Financial Markets, Health and Environment, International Econnomic Politics, Law & Regulations, National Economic Politics, Natural science, Philosophy, Technology, Views, commentaries and opinions on 06.12.10 at 20:54

There’s a lot serious stuff going on in the world at the moment. But somehow the center of attention is a young man who has managed to piss of some politicians and generals by publishing documents that proves what most people already know – or at least suspected. The WikiLeaks founder Julian Assange is now subject to the most intense manhunt by international authorities since Osama bin-Laden for having sex without a condom. The fact that a stack of reports have been issued, warning about further deterioration of the global economy, currency wars, political instability and exploding social unrest, seems to be mostly overlooked. Am I the only one to  think it’s a little peculiar?

“The WikiLeaks saga is trying its best to offer distraction, but the crisis in the euro zone remains impossible to ignore.”

Robin Bew


It’s been a strange, almost surreal, weekend. Personally I’ve been fighting off a couple of attempts to hack into my computer system, and never in the 15 years I’ve been online have I ran into so many error messages when trying to load pages on the internet. What makes it even more strange is that the WikiLeaks frenzy is happening at the same time as EU and NATO is conducting its first ever cyber war exercise, the US launch a massive operation to seize close to hundred file-sharing web sites and thousands of hackers all over the world gathered at an event organized by Google, Microsoft, NASA and the World Bank.

And all this have been planned long time ahead. The latest release of documents from WikiLeaks was also notified months in advance.

So was the scheduled release of several economic forecasts for 2011 last week. However, these have more or less been drowned in the avalanche of more or less (un)important Wiki-stories filling up both mainstream and alternative medias.

So, I think it’s time to get the focus back where it belongs; on the developments of our global economy, as the Eurogroup meet for another crisis meeting this Monday and Bloomberg reports that the euro’s worst is yet to come.

“The WikiLeaks saga is trying its best to offer distraction, but the crisis in the euro zone remains impossible to ignore. With fears of contagion increasing, our ViewsWire service examines scenarios under which countries might exit the single currency,” chief economist Robin Bew at The Economist Intelligence Unit writes in an email to subscribers. Adding: “We think the euro will ultimately survive, but significant political and economic hurdles will have to be overcome, with Portugal now likely to follow Ireland and Greece in requesting emergency EU/IMF funding.”

Last week EIU released a bunch of reports, based on separate analysis on each topic.

You have to look very hard to find something positive to hold on to. In fact, I can’t remember having read anything like this from The Economist in a very long time.

This is the headlines:

The EIU label the three first predictions with “High Probability,”  the next three as “Moderate Probability” and the two last are seen as “Low Probability”.

As I’ve been pointing out since the financial crisis became visible to most people, we are in fact dealing with a three-part crisis; the financial, the environmental and the social.

There three problems are connected, they interact with each other, feeds on each other, making each other stronger – and it’s impossible to solve one without solving the others.

Robin Bew writes:

“The UN climate summit under way in Cancún, Mexico is highly unlikely to produce a global accord on emissions cuts, though modest gains, such as on forest protection, remain possible.”

Well, the possibility of rescuing a few trees is not gonna make much difference.

As for the social (poverty) crisis, Economist Intelligence Unit concludes:

“The risk is that instability becomes systemic, with political crises in certain countries affecting others through contagion or through the actions of populist new regimes seeking to assert themselves. Potential widespread disruption poses a considerable downside risk to the Economist Intelligence Unit’s global economic forecasts.”

That’s right. Sovereign debt problems isn’t the only thing that is contagious.

The Economist Intelligence Unit‘s baseline global forecast assumes some increase in social and political unrest, but with serious fallout largely avoided. If economic circumstances were to worsen again, however, there is a danger though that incidents of unrest turn into far more intense and long-lasting events: armed rebellions, military coups, civil conflicts and perhaps even wars between states. In such circumstances, a repetition of the pressures that transformed global politics in the 1930s, though a far-removed worst-case scenario, could not be dismissed.”

In other words: If the economy gets worse, we may face a World War II scenario.

Now, take a look at the top three scenarios again…

First: Sovereign debt

“There are considerable concerns about the sustainability of public debt positions in a number of countries. Heavily indebted sovereigns – including developed economies, notably in the euro zone – could struggle to raise private financing even at higher interest rates, and some could default.”

“The US and the UK also face drastically increased fiscal deficits. They could moderate their debt burdens through inflation and devaluation but this risks undermining their bond markets, and the resultant spike in bond yields could force an acceleration of fiscal tightening, with highly negative implications for economic recovery.”

“Emerging-market defaults would create some ructions more widely, but as developed-country sovereign bonds have traditionally been considered risk-free, developed-country defaults in particular would wreak havoc on investor psychology. Banks would face write-downs on their government debt portfolios, and financial-sector guarantees by governments that default would be exposed as worthless.”

(Forecast: High probability, high impact, risk level 16)

Second: New Asset Bubble

“A flood of cheap money from stimulus measures, in particular carry trades drawing on record-low interest rates in the US, prompted a strong rally in a range of assets in the second half of 2009 and in 2010, particularly emerging-market stocks and bonds, but also in risky asset classes such as equities, high-yield bonds and commodities more broadly.”

“New bubbles could continue to grow for a considerable period of time, potentially several years, during which they will help to boost growth in the economies concerned. But they would burst suddenly, and still-fragile risk appetite could be a factor in this – a decline in risk tolerance could see investors pull their money out of emerging-market assets. Indeed, the rally in asset markets has been subject to periodic reversals in 2010 as concerns about the outlook for the global economy have re-emerged.”

“New asset bubbles may be vulnerable to painful corrections as central banks in emerging markets tighten monetary policy, fiscal stimulus is withdrawn, and the weak foundations of recovery become apparent. The resultant dislocations, including a shock to banks and a renewed rise in risk aversion, would reinforce and deepen a new economic slowdown.”

(Forecast: High probability, high impact, risk level 16)

Third: Currency Manipulation

“Tensions are rising over attempts by some countries to weaken their currencies, and the US and China remain at odds over the value of the renminbi. A global “currency war” would raise the danger of protectionist responses.”

“Tensions over exchange-rates have risen in recent months. The US Congress has been holding hearings on China’s exchange-rate policy, with a view to potential legislation to punish China for what the US regards as a mercantilist strategy of keeping the renminbi artificially low. A growing cohort of other countries are also worried about the strength of their currencies, including Brazil, Switzerland, Japan and South Korea. Market interventions by policymakers in some countries to weaken their currencies prompted Brazil’s finance minister, Guido Mantega, to warn of an “international currency war”.”

“Given the closely integrated nature of the global economy, governments will find it difficult to close off many aspects of trade, even if they want to. But trade disputes are likely to increase as populist policies clash with countries’ international obligations.”

(Forecast: High probability, high impact, risk level 16)

All eight summaries are uploaded on Scribd.

By the way – here’s the latest WikiLeaks stories:

WikiLeaks founder Julian Assange arrested in UK (BBC)

Feds block workers from WikiLeaks (CNET.com)

MasterCard pulls plug on WikiLeaks payments (CNET.com)

Swiss Bank Closes WikiLeaks Founder’s Bank Accounts (RadioFreeEurope)

WikiLeaks‘ Swedish servers come under attack again (The Herald Tribue)

Barack Omama Is More Dangerous Than WikiLeaks (American Enterprise Institute for Public Policy Research)

WikiLeaks Releases List of “Vital” US Facilities (Slate.com)

Google refuses to disclose whether they’d allow users to repost Wikileaks‘ State Department cables (The Atlantic)

Related by The Swapper:

US Credit Card User Under Surveilance Without Court Approval

In Health and Environment, International Econnomic Politics, Law & Regulations, National Economic Politics, Technology on 06.12.10 at 04:20

US Federal law enforcement agencies have been tracking Americans –  in real-time – without getting a court order, a newly released document shows. The revelation sheds a little more light on the Justice Department’s increasing power and willingness to surveil Americans with little to no judicial or Congressional oversight. The document, obtained by security researcher Christopher Soghoian, explains how so-called “Hotwatch” orders allow for real-time tracking of suspected individuals in a criminal investigation via credit card companies, rental car agencies, calling cards, and even grocery store loyalty programs.

“We currently have no idea how often law enforcement agencies engage in real-time surveillance of financial transactions.”

Christopher Soghoian

And that gives them a live feed of transaction data, according to wired.com. For credit cards, agents can get real-time information on a person’s purchases by writing their own subpoena, followed up by a order from a judge that the surveillance not be disclosed.

Then the agent sends a request for “Any and all records and information relating directly or indirectly to any and all ongoing and future transactions or events relating to any and all of the following person(s), entitities, account numbers, addresses and other matters…”

US Federal agents can also go the traditional route — going to a judge, proving probable cause and getting a search warrant — which means the target will eventually be notified they were spied on.

However, the document suggests that the normal practice is to ask for all historical records on an account or individual from a credit card company, since getting stored records is generally legally easy.

Every year, the Justice Department does have to report to Congress the numbers of criminal and national security wiretaps undertaken, as well as the number of National Security Letters issued.

Tens of thousands of NSLs are issued yearly — most with gag orders that forbid ISPs or librarians from ever saying they have ever been served with such a subpoena.

But the Justice Department does not report or make public the number of times it got real time or historic cell phone location information, nor how often it is using these so-called “hotwatch” orders.

It’s not clear what standards an agent would have to follow to get a “Hotwatch” order. The Justice Department told Soghoian the document is the only one it could find relating to “hotwatches” — which means there is either no policy or the department is witholding relevant documents.

“The Justice Department did not return a call for comment,” wired.com writes.

“A 10 page Powerpoint presentation (pdf) that I recently obtained through a Freedom of Information Act Request to the Department of Justice, reveals that law enforcement agencies routinely seek and obtain real-time surveillance of credit card transaction. The government’s guidelines reveal that this surveillance often occurs with a simple subpoena, thus sidestepping any Fourth Amendment protections,” Christopher Soghoian writes in a recent blog post.

He explains:

On October 11, 2005, the US Attorney from the Eastern District of New York submitted a court filing in the case of In re Application For Pen Register and Trap and Trace Device With Cell Site Location Authority (Magistrate’s Docket No. 05-1093), which related to the use of pen register requests for mobile phone location records.

In that case, the US Attorney’s office relied on authority they believed was contained in the All Writs Act to justify their request for customer location information.

In support of its claim, the office stated that:

“Currently, the government routinely applies for and upon a showing of relevance to an ongoing investigation receives “hotwatch” orders issued pursuant to the All Writs Act. Such orders direct a credit card issuer to disclose to law enforcement each subsequent credit card transaction effected by a subject of investigation immediately after the issuer records that transaction.”

A search of Google, Lexisnexis and Westlaw revealed nothing related to “hotwatch” orders, and so I filed a FOIA request to find out more. If the government “routinely” applies for and obtains hotwatch orders, why wasn’t there more information about these.

It took a year and a half to learn anything. The Executive office of US Attorneys at the Department of Justice located 10 pages of relevant information, but decided to withhold them in full. I filed my first ever FOIA appeal, which was successful, albeit very slow, and finally received those 10 pages this week.

As the document makes clear, Federal law enforcement agencies do not limit their surveillance of US residents to phone calls, emails and geo-location information. They are also interested in calling cards, credit cards, rental cars and airline reservations, as well as retail shopping clubs.

The document also reveals that DOJ’s preferred method of obtaining this information is via an administrative subpoena. The only role that courts play in this process is in issuing non-disclosure orders to the banks, preventing them from telling their customers that the government has spied on their financial transactions. No Fourth Amendment analysis is conducted by judges when issuing such non-disclosure orders.

While Congress has required that the courts compile and publish detailed statistical reports on the degree to which law enforcement agencies engage in wiretapping, we currently have no idea how often law enforcement agencies engage in real-time surveillance of financial transactions.

Well, here’s a copy of the pretty hot document.


And here’s more interesting stuff from wired.com:

Bloomberg See Latvian Sex Industry As Economic Indicator

In Financial Markets, Health and Environment, International Econnomic Politics, Learning, Philosophy, Views, commentaries and opinions on 05.12.10 at 22:46

Signs pointing to an end to the global recession are few. if any, as the latest US labor market figures is yet another slap in the face for the Obama-administration,while the real estate market and the consumers hardly show signs of life. The stock market, who is supposed to reflect the health of the economy seems to be totally lost in space, without any connection to the fundamentals. For the last couple of years, I’ve suggested that maybe  traditional economic theories and methods are outdated, and should be replaced. Well, the news agency Bloomberg have found a unique index which is said to be a much better barometer – the sex industry.

“It can change by the hour, by the day. It tells you very, very quickly what the state of demand is.”

Matthew Lynn

Matthew Lynn from the Bloomberg news agency believes that in hard times, traditional indicators are useless, (and I agree on that one). However,  he suggests alternative benchmarks such as the price of prostitutes. The economist claims the Latvian sex market is the most precise indicator of the health of global trade.

So far it’s been a wild ride for Latvia, once the fastest growing economy in the EU, sliding to the bottom of the list in. just six months.

It has the second highest unemployment rate in Europe (after Spain), and its GDP have dropped almost 20%, comparable to that of America during the Great Depression.

While the country is battling with recession, observers outside Latvia are scanning its shattered economy for some hint of when the global crisis will end.

Matthew Lynn from the Bloomberg agency believes that in hard times, traditional indicators are useless. He suggests alternative benchmarks such as the price of prostitutes.

The economist claims the Latvian sex market is the most precise indicator of the health of global trade.

“It’s very flexible. There’s no barrier for people coming here and the price is very flexible. It can change by the hour, by the day. It tells you very, very quickly what the state of demand is. There’s not much money flowing around the system. There’s not much cash there. And that means the economy is getting into trouble,” Matthew Lynn says.

Matthew Lynn’s main argument is that since the price for sex services has collapsed by about two-thirds since the start of the crisis, the global economy is still in big trouble.

Once the cost of illicit comforts goes up, the world will start recovering, according to Lynn’s theory.

That may be true, and I suppose Bloomberg and Matthew Lynn has done the necessary research to support it.

But some are still skeptical.

“I wouldn’t say that for any economy that will suit, simply because there’re many countries in the world where prostitutes are not legal and businesses are not transparent at all and then you will never get a valid indicator monitoring their prices even if you manage to,” financial analyst Evgeny Nadorshin says.

Russia Today reports that many Latvians are not too keen on their country being portrayed as “the red light district of Europe.”

More on the subject:

Night club closed because of sex party and fire extinguishers

“We are looking forward to recovery” – Latvian president

Desert sex amidst financial storm

Sexual discrimination victim receives compensation – in coins

Related by The Swapper:

The Economic Recovery Myth

In Financial Markets, Health and Environment, International Econnomic Politics, Law & Regulations, National Economic Politics, Views, commentaries and opinions on 05.12.10 at 03:03

Former OMB director David Stockman points out that the US government sector for the first time in history is shrinking: “The reason is that governments are broke… we are going to have to cut back government employment,” he says.

“I don’t think the market discounts anything anymore.”

David Stockman


“If you take core government plus the middle class economy (65 million jobs), that’s the breadwinning economy, if we take some numbers – how many jobs in the “core economy” in November – zero; how many jobs since last December: net zero; how many jobs since the bottom of the recession in June 2009: still a million behind from when the recession ended.”

As to whether the economy can grow without employment growth: “I can’t imagine how it can because employment growth generates income growth which is the basis for spending and saving ultimately and we are not getting income growth out of the middle class.”

According to Stockman the job growth has come almost exclusively from the part-time economy, saying:  “There is 35 million jobs in that sector, with an average wage of $20,000 a year: that is not a breadwinning job, you can’t support a family on that, you can’t save on that. Those jobs will not generate income that will become self-feeding into spending.”

And about the fact that the stock markets keeps on rising in spite of everything, Stockman says:

“I can’t explain the market… I don’t know what it is pricing today, I don’t think the market discounts anything anymore, it is purely a daytraders’ market that is trading off the FED, trading off the headlines. One day it is manic, the next day it is depressive, and we can’t draw any conclusions.”

From CNBC:

Vodpod videos no longer available.

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(h/t: Zero Hedge)

Nassim Taleb And The Violation of Reality

In Health and Environment, International Econnomic Politics, Law & Regulations, Learning, National Economic Politics, Philosophy, Views, commentaries and opinions on 05.12.10 at 01:30

This week famous author, philosopher and fund manager, Nassim Nicholas Taleb, release his new book; “The Bed of Procrusters.” It’s a story about the ancient Greek and the so-called “Procusters.” According to Nassim Taleb the story is a metaphor of our modern life, and the way we try to force our lives into something it’s not. Professor Taleb is one greatest thinkers of our time, and (unfortunately) one of the few who dare to investigate the true mysteries of our time.

Pharmaceutical companies are better at inventing diseases that match existing drugs, rather than inventing drugs to match existing diseases.”

Nassim Nicholas Taleb

Montage by WilliamBanzai7

I guess most of you connect Professor Taleb with his bestselling book,” The Black Swan” and perhaps his first, “Fooled by Randomness.” In the new book Taleb goes deeper, explaining who the Greek Procrustes was, how the story is a metaphor for our modern age, and why he decided to write the book in the way he did. However, it’s still revolving around his basic ideas on how we deal, and should deal, with what we don’t know.


“The Bed of Procrustes” is a collection of “philosophical and practical aphorisms,” according to the author.

The story is a metaphor for our modern age, he says, and explain:

Procrustes, in Greek mythology, was the cruel owner of a small estate in Corydalus in Attica on the way between Athens and Eleusis, where the mystery rites were performed.

Procrustes had a peculiar sense of hospitality; he abducted travelers, provided them with a generous dinner, then invited them to spend the night in a rather special bed. He wanted the bed to fit the traveler to perfection.

Those who were too tall had their legs chopped off with a sharp hatchet; those who were too short were stretched  – his name was said to be Damastes, or Polypemon, but he was nicknamed Procrustes, which meant “the stretcher.”

In the purest of poetic justice, Procrustes was hoisted by his own petard. One of the travelers happened to be the fearless Theseus who slayed the Minotaur later on in his heroic career. After the customary dinner, Theseus made Procrustes lie in his own bed. Then, to make him fit in it to the customary perfection, he decapitated him. Theseus thus followed Hercules’ method of paying back in kind.

In more sinister versions, such as the one in Pseudo-Apollodorus’ Bibliotheca, Procrustes owned two beds; one small, one large; he made short victims lie in the large bed, and the tall victims in the short one.

Nassim Nicholas Taleb

“Every aphorism here is about a Procrustean bed of sorts—we humans, facing limits of knowledge, and things we do not observe, the unseen and the unknown, resolve the tension by squeezing life and the world into crisp commoditized ideas, reductive categories, specific vocabularies, and prepackaged narratives, which, on the occasion, has explosive consequences,” professor Taleb says.

“Further, we seem unaware of this backward fitting, much like tailors who take great pride in delivering the perfectly fitting suit—but do so by surgically altering the limbs of their customers.”

“For instance few realize that we are changing the brains of schoolchildren through medication in order to make them adjust to the curriculum, rather than the reverse,” Taleb states.

“Since aphorisms lose their charm whenever explained, I only hint for now the central theme. I relegate further discussions to the postface.”

The new book by Nassim Taleb is full of quotes and anecdotes that really gives you something to think about.

Here’s some of them:

The person you are the most afraid to contradict is yourself.


An idea starts to be interesting when you get scared of taking it to its logical conclusion.


Pharmaceutical companies are better at inventing diseases that match existing drugs, rather than inventing drugs to match existing diseases.

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To understand the liberating effect of asceticism, consider that losing all your fortune is much less painful than losing only half of it.

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To bankrupt a fool, give him information.

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Academia is to knowledge what prostitution is to love; close enough on the surface but, to the nonsucker, not exactly the same thing.

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In science you need to understand the world; in business you need others to misunderstand it.

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I suspect that they put Socrates to death because there is something terribly unattractive, alienating, and nonhuman in thinking with too much clarity.

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Education makes the wise slightly wiser; but it makes the fool vastly more dangerous.

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The test of originality for an idea is not the absence of one single predecessor, but the presence of multiple but incompatible ones.

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Modernity’s double punishment is to make us both age prematurely and live longer.

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An erudite is someone who displays less than he knows; a journalist and consultant, the opposite; most others fall somewhere in between.

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Your brain is most intelligent when you don’t instruct it on what to do—something people who take showers discover on occasion.

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If your anger decreases with time, you did injustice; if it increases, you suffered injustice.

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I wonder if those who advocate generosity for its rewards notice the inconsistency, or if what they call generosity is an attractive investment strategy.

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Those who think religion is about “belief” don’t understand religion, and don’t understand belief.

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Work destroys your soul by stealthily invading your brain during the hours not officially spent working; be selective about professions.

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In nature we never repeat the same motion. In captivity (office, gym, commute, sports), life is just repetitive stress injury. No randomness.

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Using, as excuse, others’ failure of common sense is in itself a failure of common sense.

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Compliance with the straightjacket of narrow (Aristotelian) logic and avoidance of fatal inconsistencies are not the same thing.

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Economics cannot digest the idea that the collective (and the aggregate) are disproportionately less predictable than individuals.

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Don’t talk about “progress” in terms of longevity, safety, or comfort before comparing zoo animals to those in the wilderness.

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If you know, in the morning, what your day looks like with any precision, you are a little bit dead—the more precision, the more dead you are.

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There is no intermediate state between ice and water but there is one between life and death: employment.

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You have a calibrated life when most of what you fear has the titillating prospect of adventure.

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Nobody wants to be perfectly transparent; not to others, certainly not to himself.

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The last one is definitely one of my personal favorite quotes.

Regular visitors of the econotwist’s sites also know my own humble contribution to the Black Swan Theory – “The Brown Horse – The Impact of the Highly Impossible.”

There is no such thing as a failed experiment - only experiments with unexpected outcome.

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