Some days, it feels like the same news circulates 'round-and-'round. My interest is always piqued when two thoughtful sources, from two different spots on the planet, are discussing the same locally occurring phenomenon .
First, Jesse discusses the drop in price/rise in yield of US Treasury securities.
Foreign central banks were noticeably light buyers, much preferring the shorter durations like the three year.
Primary Dealers took a big chunk of the offering. Current trends suggest that Ben will take it off their hands through monetization.
The Fed will be under signficant pressure to buy the bonds as the bias to the short end of the curve creates imbalances that precipitate a funding crisis, and a possible currency crisis, at the Treasury in 2010 if this trend continues. It is unlikely that they will raise rates when monetization is a viable, if not preferred, option.
Short form--the world is getting cold feet about the US's situation, and our ability to produce any manner of prudent leadership to set things straight. The Beloved Leader's address on the economy, where he declared that we will have to borrow and spend our way out the mess created by borrowing and spending, certainly did not help.
The BBC's ever-droll Robert Peston tells the same tale about the UK gilt.
There's an unmistakeable smell of the 1970s about finance, politics and economics: the City recovering from a banking crisis; a super-tax on wealthy bankers; fears that international investors will stop lending to the British government; excitable chatter about the likelihood of a hung parliament. All we need now is a power cut and I would swear I had been transported back to my teens (if only).
Hmm...the same approach pursued in both countries isn't working, and the marketplace is letting both governments know. They are walking away from the auction, or sitting on their hands if they remain.
In late October 2007, my bride and I made one of our jaunts to the Lawrenceburg Antique Auction, in a county seat just north of the Alabama border. It has always been a wonderful event, and we've furnished much of the house from it. Vast amounts of wonderful pieces for sale, big crowds, high-rolling bidders--great entertainment, even if we didn't buy much.
October 2007 was different. Parking was easy to find. We walked in to a half-empty room, and gloom was in the air. The bidders had not shown up, and the ones there were sitting on their hands. Many times the opening was met with stone silence, followed by a lower opening, followed by silence. Fabulous pieces were selling for 30% of what they would have purchased a year earlier. We lusted after them, but could not think of where they could fit in our small house. We ended up buying several small tables, which we did need, enough to fill the pick-up truck, and paid under $300 for the lot of them. I honestly felt badly for the auctioneer. A few times, we and other bidders would raise the paddle just to keep the proceedings underway. We knew then that something was seriously amiss in the economy.
I wonder if we are now on the front end of the same scenario with US and UK government debt. Congress and Parliament will not restrain themselves, so the marketplace called upon to keep it all afloat has begun to demand interest rates concomitant with the risk they face.
Seriously. Would you bet much money on a government running these sorts of deficits, and occupying its time on how to expand spending via health-care, environmental regulation, stimulus packages, bailouts of both industries and states?
And a war thrown in for good measure, just to keep it interesting.
It's not the economy, stupid, to contradict Bill Clinton's Ragin' Cajun. It's the culture, the one that thinks all of the good things of life should fall into our hands like ripe fruit from the tree, because, well...it's us. We deserve it!
At least we think so. The world is perhaps beginning to disagree with us.
Saturday, December 12, 2009
Friday, December 11, 2009
While Washington Steadfastly Ignores The Mexican Border...
...the Mexicans surely don't!
This evening, CNN's Anderson Cooper will treat us to a tour of one of the tunnels used to smuggle drugs (and criminals) from Mexico to the United States.
Amongst the things Mexican culture has traditionally done well, engineering is near the top of the list. Remember those ancient pyramids, and that highly developed city that Cortez encountered in the sixteenth century? This tunnel is a very slickly designed piece of work, requiring some real design and mining expertise, definitely not an amateur's efforts.
Mexican culture is also known for its imbedded corruption. This could not have happened without the active cooperation of people in some level of authority in Tijuana(and likely, Mexico City). The tunnel is wired for electricity, complete with ventilation, etc. That's no small wiring job, and would be a pretty major consumer of electricity from the state-owned electrical utility. Imagine attempting a similar tunnel under Des Moines, by way of comparison.
This is not another 'Those Bad Mexicans' diatribe. Mexico is what it is, always has been, and likely always will be. In my misspent youth, I worked there for two years, and no news from there can ever shock me.
The problem lies with us, here on our side of the border. First, we have a culture with a huge appetite for marijuana and cocaine amongst recreational users, and heroin and worse amongst the more afflicted. If we weren't a market here for this bad stuff, there would be no effort expended on tunnels there.
Second, we have steadfastly refused as a nation to enforce the border with one of history's worst-run countries. And both places are worse for it. We can't fix Mexico, 'cuz Mexico doesn't want to be fixed. Even if it did, it's their job to put their house in order, not ours. In the meantime, we can protect our citizenry from the criminality, corruption and general stupidity that seems to flow inexorably northward.
Why does this matter to us, here in the heartland, specifically?
Last week, in a little town thirty miles south of here, one of the many who made it across the border got himself liquored-up, took to the wheel of his uninsured car, and killed two innocent people by vehicular homicide. The crime took place on a road we and our children often travel. It could so easily have been us.
Had our government carried out its duties, those innocents would be Christmas shopping for their families, the alcoholic Mexican would still be a drunk, but he would be a drunk in his homeland; and the devastated families would not forever face Christmas in the shadow of this needless tragedy.
These tragedies keep happening, and won't stop happening until we summon the will to make it stop.
The culture shapes the economy(and political landscape)...
This evening, CNN's Anderson Cooper will treat us to a tour of one of the tunnels used to smuggle drugs (and criminals) from Mexico to the United States.
Amongst the things Mexican culture has traditionally done well, engineering is near the top of the list. Remember those ancient pyramids, and that highly developed city that Cortez encountered in the sixteenth century? This tunnel is a very slickly designed piece of work, requiring some real design and mining expertise, definitely not an amateur's efforts.
Mexican culture is also known for its imbedded corruption. This could not have happened without the active cooperation of people in some level of authority in Tijuana(and likely, Mexico City). The tunnel is wired for electricity, complete with ventilation, etc. That's no small wiring job, and would be a pretty major consumer of electricity from the state-owned electrical utility. Imagine attempting a similar tunnel under Des Moines, by way of comparison.
This is not another 'Those Bad Mexicans' diatribe. Mexico is what it is, always has been, and likely always will be. In my misspent youth, I worked there for two years, and no news from there can ever shock me.
The problem lies with us, here on our side of the border. First, we have a culture with a huge appetite for marijuana and cocaine amongst recreational users, and heroin and worse amongst the more afflicted. If we weren't a market here for this bad stuff, there would be no effort expended on tunnels there.
Second, we have steadfastly refused as a nation to enforce the border with one of history's worst-run countries. And both places are worse for it. We can't fix Mexico, 'cuz Mexico doesn't want to be fixed. Even if it did, it's their job to put their house in order, not ours. In the meantime, we can protect our citizenry from the criminality, corruption and general stupidity that seems to flow inexorably northward.
Why does this matter to us, here in the heartland, specifically?
Last week, in a little town thirty miles south of here, one of the many who made it across the border got himself liquored-up, took to the wheel of his uninsured car, and killed two innocent people by vehicular homicide. The crime took place on a road we and our children often travel. It could so easily have been us.
Had our government carried out its duties, those innocents would be Christmas shopping for their families, the alcoholic Mexican would still be a drunk, but he would be a drunk in his homeland; and the devastated families would not forever face Christmas in the shadow of this needless tragedy.
These tragedies keep happening, and won't stop happening until we summon the will to make it stop.
The culture shapes the economy(and political landscape)...
RBS and the British Taxpayer. Not A Love Story
The BBC's Robert Peston once again weighs in with that English dry humor:
In my wilder imaginings over the years about the future of the public sector, it never occurred to me that one day as a taxpayer I would be financially liable for the overdrafts on 3.2 million UK retail bank accounts, £10bn of loans to British small businesses and a further £10bn of UK residential mortgages provided to 70,000 home owners.
He goes on to detail how the taxpayers of the UK will be paying for RBS into the indefinite future.
It's not pretty.
I wonder if this was assembled in order to be inexorably in place before next year's elections. Brown and Labour must certainly know they are on the way out.
Which raises the next question: What else do they have under their sleeve?
In my wilder imaginings over the years about the future of the public sector, it never occurred to me that one day as a taxpayer I would be financially liable for the overdrafts on 3.2 million UK retail bank accounts, £10bn of loans to British small businesses and a further £10bn of UK residential mortgages provided to 70,000 home owners.
He goes on to detail how the taxpayers of the UK will be paying for RBS into the indefinite future.
It's not pretty.
I wonder if this was assembled in order to be inexorably in place before next year's elections. Brown and Labour must certainly know they are on the way out.
Which raises the next question: What else do they have under their sleeve?
America's Best High Schools
US News and World Report released its list of America's best high schools today.
The list is based on a 'three-step process that examines how well a school serves its entire student body (average students, disadvantaged students, and collegebound students).'
It's an impressive list, not the least for its wide geographic distribution.
The top 100 list is here.
It's an inspiring read.
I get to work with a student in one of the top 30 on the list. It's an old building, with literally no campus around it. Students attend based on achievement, and a lottery is also involved. The level of motivation is very high. For every student there, there is at least another in the city happy to replace him. Hmm. No reports of drugs and discipline problems. He thrives there, generally, except that he is so far ahead of the maths program that boredom is a real challenge.
In the general attitude of cynicism towards schools, it's good to be reminded that greatness is possible in unlikely places. It's not so much a matter of spending money on the latest and greatest physical plant, as it is about building great faculties, and fostering that sense of community that tends to pull everyone along in the right direction.
If what we see here can be our expectations of normality, we're in for great days ahead.
The culture shapes the economy...
The list is based on a 'three-step process that examines how well a school serves its entire student body (average students, disadvantaged students, and collegebound students).'
It's an impressive list, not the least for its wide geographic distribution.
The top 100 list is here.
It's an inspiring read.
I get to work with a student in one of the top 30 on the list. It's an old building, with literally no campus around it. Students attend based on achievement, and a lottery is also involved. The level of motivation is very high. For every student there, there is at least another in the city happy to replace him. Hmm. No reports of drugs and discipline problems. He thrives there, generally, except that he is so far ahead of the maths program that boredom is a real challenge.
In the general attitude of cynicism towards schools, it's good to be reminded that greatness is possible in unlikely places. It's not so much a matter of spending money on the latest and greatest physical plant, as it is about building great faculties, and fostering that sense of community that tends to pull everyone along in the right direction.
If what we see here can be our expectations of normality, we're in for great days ahead.
The culture shapes the economy...
Thursday, December 10, 2009
Wednesday, December 9, 2009
Neel Kashkari, Poster Child Of TARP
Neel Kashkari has surfaced.
As now routinely happens, some unknown person is thrust unprepared into the spotlight of the world's gaze. He retreats, writes The Book(or more commonly, works with a ghost writer), coaches for The Book Tour, hopefully makes some bucks for his pains, and moves on to the rest of his life.
Sweet.
Remember that out-of-body experience you had when you first heard of TARP, and then read the initial proposal floated to Congress? You know, the one that essentially turned the country over to the Secretary of the Treasury?
Neel drafted it.
Jesse, linked above, has the story, and some pithy insights to share. I hope you read them.
But here is how the 'priesthood' at Treasury decided that $700 billion dollars was the figure to demand:
In February 2008, Mr Kashkari was charged with drafting an emergency plan in case the credit crunch became a full-blown financial crisis. By October the crisis had arrived and his ten-page plan became the blueprint for the banks' bailout that Mr Paulson presented to Congress.
Mr Kashkari admitted that he plucked “a number out of the air” when deciding with Mr Paulson how much funding to request from Congress for the Tarp.
He told The Washington Post that he used his BlackBerry to calculate the bailout figures: “We have $11 trillion residential mortgages, $3 trillion commercial mortgages. Total $14 trillion. Five per cent of that is $700 billion. A nice round number.”
A nice round number, indeed.
I'd love to go create my own 'round number' credit line demand, be able to walk into a bank with a shotgun, hold the tellers hostage, and walk out with my own nifty credit card. I won't even need to pay it back, and the bankers will pour me champagne to celebrate my accomplishment.
I wouldn't even ask for that much. A billion will do.
A nice, round number.
Sweet.
As now routinely happens, some unknown person is thrust unprepared into the spotlight of the world's gaze. He retreats, writes The Book(or more commonly, works with a ghost writer), coaches for The Book Tour, hopefully makes some bucks for his pains, and moves on to the rest of his life.
Sweet.
Remember that out-of-body experience you had when you first heard of TARP, and then read the initial proposal floated to Congress? You know, the one that essentially turned the country over to the Secretary of the Treasury?
Neel drafted it.
Jesse, linked above, has the story, and some pithy insights to share. I hope you read them.
But here is how the 'priesthood' at Treasury decided that $700 billion dollars was the figure to demand:
In February 2008, Mr Kashkari was charged with drafting an emergency plan in case the credit crunch became a full-blown financial crisis. By October the crisis had arrived and his ten-page plan became the blueprint for the banks' bailout that Mr Paulson presented to Congress.
Mr Kashkari admitted that he plucked “a number out of the air” when deciding with Mr Paulson how much funding to request from Congress for the Tarp.
He told The Washington Post that he used his BlackBerry to calculate the bailout figures: “We have $11 trillion residential mortgages, $3 trillion commercial mortgages. Total $14 trillion. Five per cent of that is $700 billion. A nice round number.”
A nice round number, indeed.
I'd love to go create my own 'round number' credit line demand, be able to walk into a bank with a shotgun, hold the tellers hostage, and walk out with my own nifty credit card. I won't even need to pay it back, and the bankers will pour me champagne to celebrate my accomplishment.
I wouldn't even ask for that much. A billion will do.
A nice, round number.
Sweet.
While The Media Obsess About Tiger Woods...
The students of Iran put their lives on the line in opposition to the regime.
These are posts sent from Iran, they seem authentic, but of course I can't verify them up to any real journalist's standard. So readers will have to judge for themselves.
The 'Basiji' referenced appear to be para-military/private-army types in service of the regime. It's not entirely clear from my reading, but they appear to be imports from Palestine, e.g. Hezbollah personnel, not native Persians.
It's hard to know what the students are seeking long-term, if anything. But it is clear they are deeply unhappy with the current regime.
These are posts sent from Iran, they seem authentic, but of course I can't verify them up to any real journalist's standard. So readers will have to judge for themselves.
The 'Basiji' referenced appear to be para-military/private-army types in service of the regime. It's not entirely clear from my reading, but they appear to be imports from Palestine, e.g. Hezbollah personnel, not native Persians.
It's hard to know what the students are seeking long-term, if anything. But it is clear they are deeply unhappy with the current regime.
Monday, December 7, 2009
Helicopter Ben's Legacy
HT to Skeptical CPA, who passed along this gem of wisdom:
If the US dollar were back on the gold standard, notes Societe Generale analyst Dylan Grice, then gold would have be priced at $7,648 an ounce in order to fully back all of the dollars in circulation.
Full article here.
Enjoy.
If the US dollar were back on the gold standard, notes Societe Generale analyst Dylan Grice, then gold would have be priced at $7,648 an ounce in order to fully back all of the dollars in circulation.
Full article here.
Enjoy.
The Rats Begin To Flee The Sinking Ship: So Long, Congressman Tanner
As it becomes obvious that The Beloved Leader and his gang are in for a brutal November 2010, the Democrat Congressional rats occupying vulnerable seats will begin to flee.
Locally, that would be John Tanner.
This is the guy who decries the national debt and proudly votes for unconstitutional travesties like the TARP, the Obama stimuli, and any piece of pork Mama Pelosi can serve to her vote-hungry minions. (He did vote against PelosiCare, to his credit, but I suspect it was because he perceived the voters were paying attention, and melting his staff's phones off in their hands.)
This August, he refused to schedule anything except 'phone-in' town hall meetings, essentially unpublicized. He did meet one group, at a state-run senior citizen's center, which was announced after the meeting took place. He knew what awaited him once the voters began paying attention. Calls to his office were generally met with hostile staffers who often did not even know the day's news, or what legislation was under consideration.
It's time to go, and he knows it.
Remember the old joke?
Q. What do you call twenty (fill-in-the-blank--usually lawyers) jumping off the Golden Gate Bridge?
A. A good beginning.
Now, as big a fool as Tanner is, I wish him no harm. I just want him out of public office, where he can do less harm to the nation.
With his announced retirement, we have a good beginning. Many more, from both parties, available to take that leap back into the Real World.
Plenty of room on that bridge, and plenty of time to act.
Green shoots nominee!
Locally, that would be John Tanner.
This is the guy who decries the national debt and proudly votes for unconstitutional travesties like the TARP, the Obama stimuli, and any piece of pork Mama Pelosi can serve to her vote-hungry minions. (He did vote against PelosiCare, to his credit, but I suspect it was because he perceived the voters were paying attention, and melting his staff's phones off in their hands.)
This August, he refused to schedule anything except 'phone-in' town hall meetings, essentially unpublicized. He did meet one group, at a state-run senior citizen's center, which was announced after the meeting took place. He knew what awaited him once the voters began paying attention. Calls to his office were generally met with hostile staffers who often did not even know the day's news, or what legislation was under consideration.
It's time to go, and he knows it.
Remember the old joke?
Q. What do you call twenty (fill-in-the-blank--usually lawyers) jumping off the Golden Gate Bridge?
A. A good beginning.
Now, as big a fool as Tanner is, I wish him no harm. I just want him out of public office, where he can do less harm to the nation.
With his announced retirement, we have a good beginning. Many more, from both parties, available to take that leap back into the Real World.
Plenty of room on that bridge, and plenty of time to act.
Green shoots nominee!
Oh Give Me A Home Where The Dromedaries Roam...
That sensation of relief felt over Thanksgiving that all will be well, and all manner of things will be well, with Dubai, may have been a teency-weency bit premature.
Nakheel PJSC creditors may win the right to seize a strip of barren waterfront land the size of Manhattan if the company defaults on the $3.5 billion bond backing the development.
Investors will be able to seek foreclosure on the property’s mortgages should the Dubai World unit fail to repay the loan, according to the bond’s prospectus. The debt is due on Dec. 14, after which Nakheel has two weeks to remedy a default. The property forms part of the Dubai Waterfront project, where Nakheel plans to build a city twice the size of Hong Kong.
Now, I'm aware I'm just a layman sitting in the wilds of Tennessee, but did anybody bother to question why somebody might want to build a city twice the size of Hong Kong? Did the kids with the B-school degrees who bought the bonds think to ask the obvious questions? Who **!!***??** NEEDS another city twice the size of Hong-frigging-Kong? Who's gonna populate it? What worthwhile activity will take place there that justifies its existence? Why are we lending to sheiks sitting on oceans of oil?
Why aren't we demanding the freaking OIL as collateral, instead of empty desert islands in the middle of the Indian Ocean? Does common sense never enter the equation?
In the meantime: Now the area is bare except for a cluster of partly finished low-rise buildings and idle cranes for hundreds of meters. Yesterday, camels roamed part of the land.
Dubai office values fell 58 percent in the year through September, according to Colliers International. House prices have plunged 50 percent from the peak last year. “If built houses drop 50 percent in value, un-built land will likely drop more,” he said.
Maybe they can build a camel race-track! Float bonds for it! Those coked-up morons in New York will buy anything, Ahmed.
Go for it, big guy!
Nakheel PJSC creditors may win the right to seize a strip of barren waterfront land the size of Manhattan if the company defaults on the $3.5 billion bond backing the development.
Investors will be able to seek foreclosure on the property’s mortgages should the Dubai World unit fail to repay the loan, according to the bond’s prospectus. The debt is due on Dec. 14, after which Nakheel has two weeks to remedy a default. The property forms part of the Dubai Waterfront project, where Nakheel plans to build a city twice the size of Hong Kong.
Now, I'm aware I'm just a layman sitting in the wilds of Tennessee, but did anybody bother to question why somebody might want to build a city twice the size of Hong Kong? Did the kids with the B-school degrees who bought the bonds think to ask the obvious questions? Who **!!***??** NEEDS another city twice the size of Hong-frigging-Kong? Who's gonna populate it? What worthwhile activity will take place there that justifies its existence? Why are we lending to sheiks sitting on oceans of oil?
Why aren't we demanding the freaking OIL as collateral, instead of empty desert islands in the middle of the Indian Ocean? Does common sense never enter the equation?
In the meantime: Now the area is bare except for a cluster of partly finished low-rise buildings and idle cranes for hundreds of meters. Yesterday, camels roamed part of the land.
Dubai office values fell 58 percent in the year through September, according to Colliers International. House prices have plunged 50 percent from the peak last year. “If built houses drop 50 percent in value, un-built land will likely drop more,” he said.
Maybe they can build a camel race-track! Float bonds for it! Those coked-up morons in New York will buy anything, Ahmed.
Go for it, big guy!
Sunday Evening 6 December
Church was good this morning. The children's choir sang like angels, accompanied by an angelic little harpist, and the Gospel and sermon were about Zechariah arguing with the angel Gabriel that miracles were just not possible in his day, and at his age. Little did he suspect that the Almighty was just getting warmed up.
A modest Christmas shopping trip, a lovely modest lunch with my lovely bride, who is herself a miracle, and home again to the house we've occupied for nearly twenty years. It dropped into our laps miraculously when we had not two nickels to rub together, and a number of people close to us really really furious that we had met and married.
But I do sympathize with old Zechariah. He was tired. He had fought the good fight for many a faithful year, and was grateful just to be alive and able to attend to his wife and his life. It wasn't so much lack of faith as abundance of experience, seeing too much evil flourish and too little virtue prosper in his day.
I admit it: I'm tired as well, for much the same reasons.
So tonight, here on 6 December, I'm making out the Christmas card list, and trying to remember just how well it all turned out for old Zechariah, who didn't realize that Providence was on deck, awaiting His turn at bat.
A modest Christmas shopping trip, a lovely modest lunch with my lovely bride, who is herself a miracle, and home again to the house we've occupied for nearly twenty years. It dropped into our laps miraculously when we had not two nickels to rub together, and a number of people close to us really really furious that we had met and married.
But I do sympathize with old Zechariah. He was tired. He had fought the good fight for many a faithful year, and was grateful just to be alive and able to attend to his wife and his life. It wasn't so much lack of faith as abundance of experience, seeing too much evil flourish and too little virtue prosper in his day.
I admit it: I'm tired as well, for much the same reasons.
So tonight, here on 6 December, I'm making out the Christmas card list, and trying to remember just how well it all turned out for old Zechariah, who didn't realize that Providence was on deck, awaiting His turn at bat.
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