Mish's Global Economic Trend Analysis

---

In Memory of Spock: Live Long and Prosper; Is He or Isn't He? Fish Tomatoes, Hand Transplants, Sci-Fi vs. Reality Posted: 28 Feb 2015 06:20 PM PST One of my favorite characters in TV history was Star Trek's "Spock". Yesterday, Leonard Nimoy, Spock of 'Star Trek,' Died at 83. Leonard Nimoy, the sonorous, gaunt-faced actor who won a worshipful global following as Mr. Spock, the resolutely logical human-alien first officer of the Starship Enterprise in the television and movie juggernaut "Star Trek," died on Friday morning at his home in the Bel Air section of Los Angeles. He was 83. His wife, Susan Bay Nimoy, confirmed his death, saying the cause was end-stage chronic obstructive pulmonary disease. Mr. Nimoy announced last year that he had the disease, attributing it to years of smoking, a habit he had given up three decades earlier. He had been hospitalized earlier in the week. His artistic pursuits — poetry, photography and music in addition to acting — ranged far beyond the United Federation of Planets, but it was as Mr. Spock that Mr. Nimoy became a folk hero, bringing to life one of the most indelible characters of the last half century: a cerebral, unflappable, pointy-eared Vulcan with a signature salute and blessing: "Live long and prosper" (from the Vulcan "Dif-tor heh smusma"). There's much more in the article. Inquiring minds may wish to take a look. Is He or Isn't He? Nimoy is author of two contradictory autobiographies: "I Am Not Spock," published in 1977   "I Am Spock," published in 1995. Vulcan Greeting Nimoy Explains Origin of Vulcan Greeting Link if video does not play: Leonard Nimoy Explains Origin of Vulcan Greeting. In Memory of Leonard Nimoy Science Friday has an interesting article Memory of Leonard Nimoy. In an enclosed video in the above link, Nimoy talks with Ira Flatow, physics professor John Kramer, and science fiction writer Robert Sawyer about the relationship between science and science fiction. Sci-Fi vs. Reality The Science Friday video was from 1998.  The video mentioned among other things, artificial hands and transplanting fish genes into tomatoes to make them more resistible to frost. Artificial hands are here. Fish genes in tomatoes? Let's investigate hand transplants and "fish tomatoes" in more detail. Hand Transplants Hand transplants are a success. The March 27 issue of BBC Future has the story of Rose Eveleth who says "I had a double hand transplant". Rose considers the operation a success although it required much intensive therapy. Genetically modified tomatoes were not a success to say the least. A couple of stories will explain. Does Your Tomato Have Sole? UC Santa Barbara asks Does Your Tomato Have Sole? If So, Is It Still a Veggie? "Fish tomatoes," are transgenic tomatoes that have been genetically engineered with a gene from winter flounder, which are also known as lemon sole. Fish tomatoes have become an icon in the debate over Genetically Modified Foods, especially in relation to the perceived ethical dilemma of combining genes from different species. Killer Tomatoes The above article explains the intent. The following article will explain the success or failure of the experiment. Please consider Throwing Biotech Lies at Tomatoes Remember the pictures of the fish tomatoes? For years they were an unofficial emblem of the anti-GMO movement. They depicted how anti-freeze genes from an Arctic fish were forced into tomato DNA, allowing the plants to survive frost. Scientists really did create those Frankentomatoes, but they were never put on the market. (Breyers low-fat ice cream, however, does contain anti-freeze proteins from Arctic fish genes, but that's another story.) The tomato that did make it to market was called the Flavr Savr, engineered for longer shelf life. Fortunately, it was removed from the shelves soon after it was introduced. Although there are no longer any genetically modified (GM) tomatoes being sold today, the FDA's shady approval process of the Flavr Savr provides a lesson in food safety—or rather, the lack of it—as far as gene-spliced foods are concerned. We know what really went on during the FDA's voluntary review process of the Flavr Savr in 1993, because a lawsuit forced the release of 44,000 agency memos. Bleeding stomachs Calgene, the tomatoes' creator-in-chief (now a part of Monsanto), voluntarily conducted three 28-day rat feeding studies. The rats that ate one of these Flavr Savr varieties probably wished they were in a different test group. Out of 20 female rats, 7 developed stomach lesions—bleeding stomachs. The rats eating the other Flavr Savr, or the natural tomatoes, or no tomatoes at all, had no lesions. If we humans had such effects in our stomachs, according to Dr. Arpad Pusztai, a top GMO safety and animal feeding expert, it "could lead to life-endangering hemorrhage, particularly in the elderly who use aspirin to prevent thrombosis." Oh yeah, some rats died The team that had obtained the formerly secret FDA documents sent the full Flavr Savr studies to Dr. Pusztai for review and comment. While reading them, he happened across an endnote that apparently the FDA scientists either did not see or chose to ignore. The text nonchalantly indicated that 7 of the 40 rats fed the Flavr Savr tomato died within two weeks. But the endnote summarily dismissed the cause of death as husbandry error, and no additional data or explanation was provided. The dead rats were simply replaced with new ones. When I discussed this finding with Dr. Pusztai over the phone, he was beside himself. He told me emphatically that in proper studies, you never just dismiss the cause of death with an unsupported footnote. He said that the details of the post mortem analysis must be included in order to rule out possible causes or to raise questions for additional research. Furthermore, you simply never replace test animals once the research begins. Questionable follow-up study Calgene repeated the rat study. This time, one male rat from the non-GM group of 20, and two females from the GM-fed group of 15, showed stomach lesions. Calgene claimed success. They said that the necrosis (dead tissue) and erosions (inflammation and bleeding) were "incidental" and not tomato-related. In reality, the new study was not actually a "repeat." They used tomatoes from a different batch and used a freeze-dried concentrate rather then the frozen concentrate used in the previous trial. Dr. Martineau explained to me that by freeze-drying, it allowed them to put more of the concentrated tomato into each rat. In spite of the outstanding issues, the political appointees at the FDA concluded that the lesions were not related to the GM tomatoes. To be on the safe side, however, Calgene on its own chose not to commercialize the tomato line that was associated with the high rate of stomach lesions and deaths. The other line went onto supermarket shelves in 1994. Faulty science rules the day This was the very first GM food crop to be consumed in the US. It was arguably the most radical change in our food in all of human history. It was the product of an infant science that was prone to side-effects. Yet it was placed on the market without required labels, warnings, or post-marketing surveillance. One hopes that the FDA would have been exhaustive in their approval process, holding back approvals until all doubts were extinguished. But the agency was officially mandated with promoting biotechnology and bent over backwards to push GMOs onto the market. As a result, their evaluation was woefully inadequate. Federal Death Agency I was at a Casey conference last September and Doug Casey commented the FDA (Food and Drug Administration) ought to be reclassified as the Federal Death Agency. Those articles help explain why. I conclude "Live long and prosper" ... and don't eat "fish tomatoes". Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Greece Negotiations Resume Again; "Constructive Ambiguity"; Schäuble Outmaneuvered! Posted: 28 Feb 2015 03:00 PM PST On Friday, the German Bundestag Backed the Greek Bailout Extension. Ahead of the vote, many commented that Greece collapsed. It's not all that simple as I have explained. The likely explanation for the alleged collapse of Syriza is Greece did not have a primary account surplus. Had it left now, it would have been forced off the euro, violating a campaign promise of Syriza. Caving in required temporary caving in of other campaign promises. Both Sides Got Something The four-month extension gives Greece a better chance to prepare for default while allowing Greece to stay on the euro. The extension also give the ECB four more months to prepare for Grexit or default. Properly analyzed, both sides got something. Isn't that what usually happens in complex negotiations? Third Bailout Needed Meanwhile, it's pretty clear that Greece needs yet another bailout. I wrote about the bailout issues and the primary surplus issues on February 11 in Third Greek Bailout? Another €53.8 Billion Needed? Primary Account Surplus Revisited. "Real" Negotiations Begin Given that Greece does indeed need a third bailout, today's headline story should not be at all surprising: Greece Seeks Negotiations on ECB Bond Repayment. Greece called into question on Saturday a major debt repayment it must make to the European Central Bank this summer, after acknowledging it faces problems in meeting its obligations to international creditors. Finance Minister Yanis Varoufakis said Athens should negotiate with the ECB on 6.7 billion euros ($7.5 billion) in Greek government bonds held by the Frankfurt-based bank that mature in July and August. Varoufakis did not say what he hoped to achieve in any talks, but he accused the ECB of making a mistake in buying the bonds around the time Greece had to take an EU/IMF bailout in 2010. "Shouldn't we negotiate this? We will fight it," he said in an interview with Skai television. "If we had the money we would pay ... They know we don't have it." With tax revenue falling far short of target last month and an economic recovery faltering, the state must repay an IMF loan of around 1.6 billion euros in March and find 800 million in interest payments in April. It then needs about 7.5 billion in July and August to repay the bonds held by the ECB and make other interest payments. Varoufakis, who has staged a media blitz in recent days to sell the euro zone deal to the Greek people, singled out former ECB President Jean-Claude Trichet for criticism. "One part of the negotiations will be on what will happen to these bonds which unfortunately and wrongly Mr Trichet bought," he said. "I see it as a mistake - but the ECB did this with the aim of keeping us in the markets in 2010. They failed." Varoufakis argued that if the bonds had remained in investors' hands, their value would have been cut by 90 percent under a restructuring of Greece's privately held debt in 2012, reducing the burden on the state. The ECB bought the bonds at a deep discount and made large profits because their value rose as the euro zone debt crisis eased. Under Greece's second bailout deal, these profits were due to be returned to Athens to help it repay debt. Athens received a partial payment in 2013 but euro zone countries are withholding a further 1.9 billion euros pending the review of Greece's economic plans. Varoufakis wants this money sent directly to the IMF to meet the March payment. Curious Timing Although the above headline and details are not surprising, the timing may appear somewhat curious. Even though the Bundestag signed off, the eurogroup as a whole has not ratified the extension. Today's call for further negotiations ahead of that vote are sure to raise more than a few eyebrows. Why now? I have two possible game theory explanations Varoufakis wants to quell Greek parliament sentiment that Syriza collapsed, and he feels the need to do that right away Syriza really does not care if it is forced out of the eurozone as long as Greece can 100% without a doubt place the blame elsewhere Advocates of position number two may argue that by caving into the demands and getting Germany to go along, it will not appear to anyone as if Syriza was responsible for Grexit, should the eurogroup parliament reject the extension. Which is more reasonable? As a fan of Occam's Razor (the rationale that requires the fewest assumptions is most often the correct explanation), I vote for number one. Option 1 is self-explanatory. Option 2 requires a lie by Syriza (that it does not really want to stay on the euro), and a complex way to make that happen, absolving themselves of blame because the Greek population as a whole does want to keep the euro. Constructive Ambiguity As a result of the timing, I expect still more bickering accompanied by still more warnings. Nonetheless, the extension will be approved. Also in support of theory number one is Intentional Vagueness. Greece's finance minister says the country's agreement with its European creditors to extend its international loan agreement by four months was intentionally vague to ensure the European countries that need to have it ratified by their parliaments would be able to do so. Greece was granted the extension by its European creditors last week in exchange for a commitment to budget reforms Varoufakis laid out in a document sent to Brussels. The list is a policy plan but does not contain specific measures or figures. Varoufakis said that "we are very proud of the degree of ambiguity. And I use a term, constructive ambiguity." Using Time Wisely In the next four months, the real negotiations begin. Expect Syriza to announce it really did not cave in at all, because the document is purposely vague. Let's revisit a couple of statement from my February 22 article Tspiras Claims to have "Won a Battle, Not the War"; Greece to Combat Tax Evasion; Illusion Shattered; Another Bailout? "Once you get them into the safe space for the next four months, there'll be another set of discussions which will effectively involve the negotiation of a third program for Greece," said Irish Finance Minister Michael Noonan.   German finance minister Wolfgang Schäuble rubbed Greek capitulation in Tsipras' face with his comment "The Greeks certainly will have a difficult time to explain the deal to their voters. As long as the programme isn't successfully completed, there will be no payout." Schäuble Outmaneuvered  In retrospect, number two is rather amusing. How will Syriza explain this to the Greeks? Like this: We got a four-month extension in return for vague promises at our discretion. Essentially we got the extension for free. Now we can negotiate payments to the ECB and IMF!  I suggest Schäuble was outmaneuvered by game theory book author Varoufakis. (See Mish's Game Theory Math) If Syriza uses that time wisely, it can get back to a state of primary account surplus. And if it does, it will be in a far position to tell the much hated Troika where to go. I still have odds of default (with or without Grexit), well over 50% by June. Which one depends on the state of primary account surplus in June when this extension ends. All that happened in February was approval of four month extension giving both sides time to prepare for the inevitable. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

You are subscribed to email updates from Mish's Global Economic Trend Analysis To stop receiving these emails, you may unsubscribe now.	Email delivery powered by Google
Google Inc., 1600 Amphitheatre Parkway, Mountain View, CA 94043, United States