sâmbătă, 26 mai 2012

Seth's Blog : This is (still) broken

This is (still) broken

Two things worth a design rant, as well as a book and a free video talk...

I apologize if you see the world with more frustration after this.



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Weekly Address: Honoring Our Fallen Heroes this Memorial Day

The White House

Your Daily Snapshot for
Saturday, May 26, 2012

 

Weekly Address: Honoring Our Fallen Heroes this Memorial Day

President Obama pays tribute to our men and women in uniform who have died in service to our country.

Watch the President's weekly address:

Weekly Address May 25, 2012

President Barack Obama tapes the Weekly Address to the nation in the Map Room of the White House, May 25, 2012. (Official White House Photo by Lawrence Jackson)

Weekly Wrap Up

Your quick look at this week on Whitehouse.gov:

An Affront to American Values: At the Symposium on Global Agriculture and Food Security President Obama addressed how world hunger does not receive the attention it deserves from the global community, including our own nation. He mentions that, "When tens of thousands of children when tens of thousands of children die from the agony of starvation, as in Somalia, that sends us a message we've still got a lot of work to do. It's unacceptable. It's an outrage. It's an affront to who we are."

G8 Summit: This past weekend the U.S. hosted leaders from the eight largest nation's in terms of economy at Camp David in Chicago. At this summit, world leaders held conversations about world hunger, as well as on the priority of growth in jobs in the world economy.

The Final Chapters: President Obama participated in the International Security Assistance Force meeting on Afghanistan, with more than 60 countries where he reiterated that troubles in Afghanistan were not over, but that serious progress has been made towards solving issues with Al Qaeda.

Resilience in the Face of Tragedy: Then President Obama made his way to Joplin, Missouri to attend the town's high school graduation. This visit nearly coincided to the day with the one year anniversary of the tornado that devastated the town. President Obama remarked on how the spirit of Joplin was commendable, and a testament that the American people are in it together, even in the toughest of times.

The Future of Energy: President Obama's last stop this week landed him in Newton, Iowa where TPI Composites manufactures wind turbine blades. Here he restated the importance of cleaner, renewable energy and pushed Congress to act on his To-Do-List. "If Congress doesn't act, companies like this one will take a hit," he said. "Jobs will be lost. That's not a guess, that's a fact. We can't let that happen." The President followed up this talk up with a session of live tweeting to people, answering thier questions in less than 140 characters.

West Wing Week: Your video guide to everything that's happened this week at 1600 Pennsylvania Avenue: Watch here

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Seth's Blog : What are you leaving behind?

What are you leaving behind?

I love watching contrails, those streams of white frozen exhaust that jets leave behind. It's a temporary track in the sand, and then the sun melts them and they're gone.

Go to Montana and you might see the tracks dinosaurs left a bazillion years ago. Same sort of travel, very different half-life of their passage.

All day long you're emailing or tweeting or liking or meeting... and every once in a while, something tangible is produced. But is there a mark of your passage? Fifty years later, we might hear a demo tape or an outtake of something a musician scratched together while making an album. Often, though, there's no trace.

I'm fascinated by blogs like this one, which are basically public notes and coffee breaks by a brilliant designer in between her 'real' work. Unlike tweets, which vanish, Tina's posts are here for a long time and much easier to share and bookmark. Her trail becomes useful not just to her, but to everyone who is interested.

What would happen if you took ten minutes of coffeebreak downtime every day and produced an online artifact instead? What if your collected thoughts about your industry became an ebook or a series of useful instructions or pages or videos?

What if we all did that?



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vineri, 25 mai 2012

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


"ECB Will be Insolvent and Costs May Exceed 1 Trillion Euros" Says IIF Director; If the ECB Prints, Would Germany Exit the Euro?

Posted: 25 May 2012 02:56 PM PDT

According to IIF director Charles Dallara in a Bloomberg interview, "ECB will be insolvent if Greece were to exit the euro. Europe would have to first and foremost recapitalize its central bank."

Excuse me for asking but how would they attempt to do that? Print Euros?

Please consider Dallara Says Greek Euro Exit May Exceed 1 Trillion Euros
The cost of Greece exiting the euro would be unmanageable and probably exceed the 1 trillion euros ($1.25 trillion) previously estimated by the Institute of International Finance, the group's managing director said.

The Washington-based IIF's projection from earlier this year is "a bit dated now" and "probably on the low side," Charles Dallara said in an interview in Rome today. "Those who think that Europe, and more broadly the global economy, are really prepared for a Greek exit should think again."

The European Central Bank's exposure to Greek liabilities is more than twice as big as the ECB's capital, said Dallara, who represented banks in their negotiations with the Greek government on its debt restructuring. As a result, he predicted the bank would be unable to provide liquidity and stabilize the euro-area financial sector.

"The ECB will be insolvent" if Greece were to exit the euro, Dallara said. "Europe would have to first and foremost recapitalize its central bank."

In February, the IIF estimated that Greece's liabilities, in the event of a euro exit, could be crippling. "It is hard to see how they would not exceed 1 trillion euros," the group said in an internal Feb. 18 report that hasn't been made public.

It's not clear whether Spain will need a bailout as it seeks to help its banks weather the euro crisis, he said.

"The only way to help markets see past that obscurity is to remove the cloud of uncertainties of national fiscal position and move toward unification," Dallara said.
Suspect Thinking or Purposeful Fear-mongering?

Since it is perfectly clear that Spain is an untenable situation, and since it is equally clear that unification is not going to happen and would not solve numerous problems, one has to wonder about the rest of his analysis as well.

However, Dallara's statements regarding ECB exposure to Greek liabilities rings true, so let's assume the trillion+ euro figure is correct.

Just where is Europe to get that?

Greece Exit Manageable?

One needs to balance Dallara's statements with statements from Germany that a Greece exit is manageable. For example The Telegraph reports Bundesbank says Greek euro exit would be 'manageable'
The impact of a Greek exit from the eurozone would be substantial but "manageable", Germany's Bundesbank said, raising pressure on Athens to keep its painful economic reforms on track.

Echoing German political leaders, the Bundesbank warned against Europe easing the conditions for Greece to access aid.

"Attempting to kick-start the economy in the short term and putting off consolidation efforts in the long term are not conducive to regaining lost confidence."
Counterbluff?

Bloomberg reports Greek Euro Exit 'Manageable' for Markets, BdB German Banks Say
A German banking association that represents Deutsche Bank AG (DBK), Commerzbank AG (CBK) and more than 200 other lenders said investors are prepared should Greece leave the euro area.

"It would be manageable for markets," Andreas Schmitz, president of the BdB Association of German Banks told reporters in Frankfurt yesterday. "The risks have largely been priced in. A Greek exit would bring lower risks than two years ago but is not to be underestimated."
Priced In? Who is Bluffing Whom?

The question is: who is bluffing whom or do they all believe these contradictory statements?

In response to What if Tsipras is Not Bluffing? Who Holds the Upper hand? What is Troika's Biggest Fear? Can Greece Possibly Stay in the Eurozone After Default? my friend Pater Tenebrarum pinged me via email with this set of statements.

Whether they are or are not right about this, the Germans now believe that the euro area can survive a Greek exit. Tsipras can really threaten them with nothing. It's a miscalculation, he underestimates how desperate the political mood in Germany and elsewhere has become. 

If Tsipras goes through with his threat, Greece will be cut off from ELA and TARGET-2 and that will be that. Check my Catch 22 Revisited post.

The Germans have had enough, and so have many others - primarily Portugal and Ireland, who are furious that the Greeks are threatening to drag them down with them. 

The chances of Greece getting kicked out have risen to 85% in my opinion.

Desperate Political Mood

Perhaps Germany misunderstands the desperate political mood in Greece. More importantly, given the politically charged emotions, does anyone understand anything or is it all a pack of lies and suppositions everywhere?

If the ECB Prints, Would Germany Exit the Euro?

If Tsipras wins the June 17th election (I think it is a 60+% chance) then if the ECB would be made insolvent as Dallara suggests, what would Germany do? What would the ECB to do?

If the ECB prints, would Germany leave?

Thus it is not so simple as to say "Germans have had enough" given that Mario Draghi sits as ECB president. Would Germany exit the euro if Draghi takes a course of action Germany does not agree with?

Those are the questions at hand now. Clearly the questions have escalated in significance.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Spain's Bankrupt Catalonia Region "Running Out of Options" to Refinance €13 Billion; Total Regional Needs are €50.7 Billion; Regions Want "Open Bar" with Central Bank Guarantees

Posted: 25 May 2012 12:15 PM PDT

The crisis in Spain is rapidly coming to a head. This crisis has nothing to do with Greek "contagion" as is widely believed. Spain dug this hole by itself. Spain's immediate unsolvable problems are a bankrupt banking system coupled with bankrupt regions that have no way to pay bills. Spain's regional governments need to roll €35.7 billion and there is current deficit of €15 billion.

The president of Spain's Catalonia Region said it faces refinancing needs of €13 billion and is "running out of options refinance its debt".

Catalonia accounts for about one fifth of the Spanish economy.

Moreover, Spain's Valencia region set off alarm bells on a six-month €19 billion bond issue because it may be forced to pay a 7% return, more than two points above what Greece is paying for their junk bonds.

Regions Want "Open Bar" with Central Bank Guarantees

Let's not mince words. Spanish regional governments are clearly and undeniably bankrupt. It should come as no surprise that the regional governments have asked the central government for "an open bar, meaning that the state allows the joint issuance of debt with the guarantee explicit regional treasury, and without demand conditions change, allowing them access to cheaper financing. The matter was discussed again at the Council of Fiscal and Financial Policy last Thursday.

The above story was pieced together with help of Google translate and the following articles:

The rescue of Catalonia and market nerves about Spain

In Guindos wants to keep money in advance to the CCAA

The problem for Spain is if it guarantees regional debt (the term used for this is "Hispabonos") then the credit rating of Spain will drop and all of Spain's borrowing costs will rise.

Bankruptcy, default, and an exit of the eurozone coupled with work-rule and pension reform is the only realistic solution.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Merkel's 6-Point Plan to Save Europe; Merkel Backed Into Tight Corner: Social Democrats Threaten to Not Ratify Merkozy Treaty Without Growth Measures; Merkel Coalition at Risk

Posted: 25 May 2012 10:10 AM PDT

It would be quite ironic and rather fitting if Germany and France fail to ratify the Merkozy treaty. 25 Nations have ratified the treaty but France and Germany still have not.

French president Francois Hollande has already threatened non-ratification unless the treaty is revised.

The Leader of the Social Democrat Party (SPD)in Germany, Frank-Walter Steinmeier, is making similar threats for the first time.

Effectively chancellor Merkel is painted into a huge corner with no wiggle room. "I guarantee you, there will only be a fiscal pact if it includes complementary growth elements," Steinmeier said.

Specifically, Steinmeier wants a financial transaction tax, expansion of loan volume to the European Investment Bank, and a nebulous "strengthening of investment power".

Steinmeier also called for the creation of a European debt repayment fund. He said that euro bonds could only be introduced "if they come with strict conditions and we have harmonized European economic and finance policy."

Merkel needs those SPD votes because treaty ratification takes a two-thirds majority in the Bundestag, Germany's parliament.

Merkel's 6-Point Plan to Save Europe

Backed into a corner, Berlin Proposes European Special Economic Zones.
With Europe beginning to look for alternatives to its exclusive focus on austerity, the German government has developed a six-point plan to foster economic growth in Europe, SPIEGEL has learned. Included in the proposal is the creation of special economic zones in struggling euro-zone countries.

The proposal is part of a six-point plan the German government plans to introduce into the discussion on measures to stimulate economic growth taking place in the European Union. The proposal also calls for the countries to set up trusts similar to the Treuhand trust created in Germany at the time of reunification that then sold old off most of former East Germany's state-owned enterprises in order to divest those countries' numerous government-owned companies.

The plan also calls for the countries to adopt Germany's dual education system, which combines a standardized practical education at a vocational school with an apprenticeship in the same field at a company in order to combat high youth unemployment.

The plan recommends that countries with high unemployment also adopt reforms undertaken by Germany, including a loosening of provisions that make it difficult to fire permanent employees and to create employment relationships with lower tax burdens and social security contributions.
Too Little Too Late

Some of those ideas seem quite reasonable. However, haven't they been agreed to before?

How many times has Greece promised work-rule reform only to see nothing happening? Spain has not done much either. Nor has Italy.


Merkel Coalition at Risk

At every juncture, Merkel is increasing backed into a corner - by French President Francois Hollande, by ECB president Mario Draghi who sides with Hollande, by Mario Monti, Prime Minister of Italy, and now by the SPD.

As I see the demands, I fail to see how the 6-point proposal comes close to what SPD wants.

Here is the key question: Will the plan satisfy Social Democrats? If not, Merkel's coalition government itself is at risk. 

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Detroit Goes Dark: Half of Detroit's Street Lights May Go Out To Save Money; Left to the Rats

Posted: 25 May 2012 08:36 AM PDT

Cash strapped Detroit has lost 60 percent of its population since 1950. What's left is a sprawling mass of vacant, worthless homes stripped of copper and anything else worthwhile.

Does it make sense to have streetlight in these areas? What about paving cracked sidewalks? What about other services? Is anything salvageable?

To save money, huge sections of the city will be left to the rats. Then again, 40% of Detroit's streetlights do not work already. By that measure, the city has long ago been left to the rats.

Bloomberg reports Half of Detroit's Streetlights May Go Out as City Shrinks.
Detroit, whose 139 square miles contain 60 percent fewer residents than in 1950, will try to nudge them into a smaller living space by eliminating almost half its streetlights.

As it is, 40 percent of the 88,000 streetlights are broken and the city, whose finances are to be overseen by an appointed board, can't afford to fix them. Mayor Dave Bing's plan would create an authority to borrow $160 million to upgrade and reduce the number of streetlights to 46,000. Maintenance would be contracted out, saving the city $10 million a year.

"You have to identify those neighborhoods where you want to concentrate your population," said Chris Brown, Detroit's chief operating officer. "We're not going to light distressed areas like we light other areas."

Delivering services to a thinly spread population is expensive. Some 20 neighborhoods, each a square mile or more, are only 10 to 15 percent occupied, said John Mogk, a law professor at Wayne State University who specializes in urban law and policy. He said the city can't force residents to move, and it's almost impossible under Michigan law for the city to seize properties for development.

As Detroit's streets go dark, some of those neighborhoods may fade away with the dying light.

360 Degree Photo Tour

Please take a look at this amazing 360 degree photo tour of several spots in or around Detroit, including the abandoned Michigan Central Train station.

Reader "Rick" who sent the link suggested "It looks like a scene from the movie Escape from New York"

Give the images time to load. They first load in black-and-white, then color. You can use the mouse to pan around but it is easiest to use the left and right arrows on the image.

Here is an image of the Michigan Central Train depot from the outside courtesy of the Wall Street Journal article Less Than a Full-Service City




At the core of Detroit's problems is public unions, private unions, a manufacturing exodus, graft, and political pandering to unions. If you get the idea unions and politicians are a big part of Detroit's problems, then you certainly get the idea.

For still more, please Search This Blog for Detroit.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


What if Tsipras is Not Bluffing? Who Holds the Upper hand? What is Troika's Biggest Fear? Can Greece Possibly Stay in the Eurozone After Default?

Posted: 25 May 2012 12:47 AM PDT

I have read countless articles over the past few week stating a belief that Syriza party leader Alexis Tsipras is bluffing in his threat to stay in the euro but default in debts.

Is it remotely possible to default and stay in the eurozone?

Since this is a multi-part question, let's first address the question "is this a bluff?"

A few snips from Der Spiegel article Tsipras Says Berlin Must Back Down on Austerity may help you decide.
Alexis Tsipras, the leftist leader who could hold the whole of Europe to ransom if he wins the Greek election on June 17, breezed into Berlin on Tuesday to tell Germans they don't own the euro zone, and that they will endanger the whole currency block if they insist on stringent austerity for his recession-hit country.

'With Austerity, Greece Will Soon Need a Third Bailout'

"We all have a duty to prevent a catastrophe," he said. "The possibility of the dissolution of the euro zone is not a temporary storm, it would be a historic, very negative development for the entire world.

"If Syriza wins the election on June 17, it won't mean we will leave the euro, on the contrary it offers a big chance for us to save the euro. If the austerity continues, Greece will need a third bailout in a few months, and a further debt restructuring, and that could enforce a return to the national currency.

"We are proposing a way to save the euro. Our possible election victory offers the prospect of stabilizing Europe, not causing more instability as feared," Tsipras added.

'High Hopes Regarding Break of German-French Axis'

He left no doubt that if he wins in June, Greece won't quit the euro without a fight. "The euro zone has no owners or landlords, we're not tenants in the euro zone, we're equal partners, and no one should take on the role as owners," he said, in another apparent swipe at Germany. "The treaty says no country can be evicted from the currency union.

"Austerity has evidently failed because Greek society has been destroyed, the production base has been dissolved. Our country has been in a deep recession for the fifth consecutive year, this has never happened in Europe in peacetime."

German taxpayers were having their money thrown "into a bottomless pit" in Greece, he said -- because bankers were getting most of it, and the Greek people weren't seeing any benefit.

"If we had had a different bailout program from the start that wasn't based on strict austerity but on growth and job creation, the Greeks could get back on their feet and pay back the debt," Tsipras said. "If you're giving a patient a drug that's making him worse the solution isn't to increase the dosage but to stop giving the drug.

"If the patient can't be cured the disease will spread to the whole of Europe and we all carry a historic responsibility to prevent this."
Does that Sound Like a Bluff?

Does that sound like a bluff or a raging madman as some make him out to be? While anyone can agree or disagree with his views I suggest his positions are carefully crafted. From the sounds of it (not that anyone can trust any politician), he seems reasonably sincere.

Moreover, bear in mind the "Greek Choice". Citizens can vote for New Democracy or Pasok, two parties that had a major hand in destroying Greece, or they can vote for a fresh face that tells them what they want to hear.

Is that politics by Tsipras or does he believe what he is saying? Does it even matter?

I suggest it doesn't matter. Voters are fed up with lies and hypocrisy of the previous leadership and want a change. New lies (if they are lies and not genuine beliefs) are no worse than old lies.

Greek Poll Shows Syriza Gaining Support Before June Vote

Shortly after the last stalemated-election, polls showed support for Syriza rose to a commanding lead. Then following a fear-mongering campaign from Germany, mainstream media, and other places, New Democracy went back into the lead.

Now, in a see-saw battle, Greek Poll Shows Syriza Gaining Support Before June Vote.
May 24, 2012

A Greek opinion poll showed the Syriza party, which is opposed to implementing Greece's international financial rescue, building on its lead in voter support ahead of elections to be held June 17.

Syriza had 30 percent support, compared with 28 percent a week earlier, according to a Public Issue poll presented on Athens-based Skai TV today. That was ahead of pro-bailout party New Democracy, which had 26 percent support, up from 24 percent a week earlier, according to the survey.

European leaders meeting in Brussels tied their next steps on the financial crisis to the outcome of the bitterly contested Greek vote. The six-hour summit ended early today with an exhortation to Greek voters to elect a pro-austerity government that will make the budget cuts needed to keep the financially ravaged country in the group that uses the euro.

The poll showed 85 percent of Greeks wanted to keep the euro, compared with 12 percent who were opposed to retaining the currency. The survey also showed 62 percent against the terms of the bailout and 28 percent in favor.
Survey Results Show Greeks Want to Stay in Euro but Change the Terms

Is that remotely possible? Technically yes.

There is no provision to kick any county out of the eurozone and no process that allows it to happen either. However, nothing can stop a country from exiting. Nothing can stop a country from defaulting either.

The key factor is that as the budget sits now, Greece will run out of money without aid. Were that to happen, the only way Greece could pay bills is by returning to the drachma (assuming the Troika does not blink).

However, what if Greece could balance its budget? Then what?

Such a scenario, however remote, is technically possible and it probably has the ECB and banks scared s***less.

What is Troika's Biggest Fear?

Contrary to widespread fear-mongering campaigns by Merkel and mainstream media including Bloomberg (see Greek Voters Need to Look Beyond the Lies of Bloomberg, Merkel, ECB, IMF, Ekathimerini; Greece Nightmare Coming or Already at Hand?) the big fear of Troika is not that Greece implodes in the wake of a eurozone exit, but rather that it doesn't!

Indeed, what if Greece defaulted on debt and recovered à la Iceland?

While I do not think that is likely (before massive multi-year pain), it is theoretically possible.

Regardless, and without a doubt,  if Greece would implement genuine work-rule and pension reform following a default, it would recover faster than if it sticks to the Troika plan. Given Tsipras' stated positions, such a course of action is highly unlikely to say the least, but Tsipras may very well implode within a year, and followed by someone who does get the job done.

Who Holds the Upper hand?

The above discussion should make it very clear. Tsipras has nothing to lose and everything to gain and the Troika knows it. All that remains to be seen is whether Greek voters snatch defeat from the jaws of victory on June 17.

Once again, I have no love of the leftist policies of  Tsipras. However, it is in Greece's best interest to exit the eurozone and default on debt. To that end, I hope he wins the election on June 17.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Quick Note About Desperate Lies by Super Mario

Posted: 25 May 2012 12:42 AM PDT

I have no idea what the stock market will do on Friday (nor does anyone else) but I did notice a quick flip on the futures from red to green in the early hours of the morning following preposterous lies by Italian prime minister Mario Monti.

Please laugh with me about the following ridiculous report: German Bonds Decline as Monti Damps Greek Euro Exit Speculation

German 30-year bonds fell for the first time in three days after Italian Prime Minister Mario Monti said Greece is likely to stay in the euro, and Italy can help persuade Germany to support Europe's "common good."

If you expect to see more preposterous rumors, you will not be disappointed.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List