Links 1/20/10

Astronomy Picture of the Day Nasa (hat tip reader John M). Today you get the known universe.

Pretty women ‘anger more easily’ BBC (hat tip Michael T)

Fight to save dying plant species BBC

The Greek tragedy deserves a global audience Financial Times

Goldman Sachs staff must wait to hear size of bonuses Guardian (hat tip Michael T)

China Asks Some Banks to Limit Lending on Insufficient Capital Bloomberg

The fallout: Democrats rethinking health care bill Politco. I don’t see the Brown victory as being a repudiation of the health care reform as much as of Obama’s crony capitalist policies. But the immediate impact will be on the legislation.

Beware global economic imbalances, Mervyn King warns Guardian

The Greek tragedy deserves a global audience Martin Wolf, Financial Times. Reader Swedish Lex notes:

What I am mainly worried about is Germany’s intentions. The French would be quite inclined to pay the political price in order to save the euro. I can however not figure out Germany’s and Merkel’s intentions, neither what it wants with the EU on the whole and whether they are beginning to believe that the political and economic constraints that follow from a common currency with rowdy Southeners are a nuisance.

The sweetest usurious bastards John Hempton

Antidote du jour (hat tip reader Jon M, photo by his friend Byung Lee, who took it in Patagonia):

DSC_0980

links for 2010-01-19

links for 2010-01-18

Links 1/19/10

Scientists Find a Shared Gene in Dogs With Compulsive Behavior New York Times

Casper the commuting cat killed by hit-and-run driver Guardian

Pirates get record ransom for Greek supertanker Raw Story. Reader John D adds: “And Goldman may start underwriting the pirates if these profits continue.”

Exxon Valdez oil ’still persists’ BBC

Yellowstone hit by swarm of earthquakes Denver Post (hat tip reader John D)

Google squirts water-pistol at China’s Great Firewall amidst hypocrisy John Sylvester (hat tip reader Michael T)

France joins Germany in call to dump IE Personal Computer World

Sarah Palin President? New Poll Says Most Don’t Want Her To Run Huffington Post

Fractured Narrative: Haitian Calm, American Cynicism Chris Floyd

New Orleans, without the SCA Angry Bear

Where the Jobs Are Michael Panzner

Market (and taxpayer) sensitive redaction John Hempton

A bank levy will not stop the doomsday cycle Peter Boone and Simon Johnson

Antidote du jour (hat tip reader Buzz):

4237399932_451c8ec9e3

Links 1/18/10

Shoot, I had this ready to go last night! Apologies!

Clash over Haiti aid flights: French blame US over medical delays. This is THE lead story in the Financial Times. Per the Greg Palast link provided yesterday, Iceland and China both got some help to Haiti before the US did. The US, by contrast, sends an aircraft carrier three days into the crisis, with no emergency supplies of any kind. And we have this as the lead story in the New York Times: Rescues Beat Dimming Odds in Haiti when this story Looters roam Port-au-Prince as earthquake death toll estimate climbs Guardian (hat tip reader Michael T) seems a much more accurate take of the state of affairs. Now perhaps somewhere in the US, the MSM is providing coverage of our shades-of-Katrina operations in Haiti, but it looks as if that story is instead being told abroad, while here, we are getting heartwarming stories of rescues.

Don’t Shelter Your Children: Coping With Stress As A Child Develops Resilience And Emotion Regulation As An Adult Scientific Blogging (hat tip reader Michael T). My one data point here is a woman (now over 60) whose mother sheltered her throughout her childhood. She regularly has panic attacks all her adult life.

‘Doomsday Clock’ moves a minute back BBC

New York Times Ready to Charge Online Readers New York Magazine and How the NYT should construct its paywall Felix Salmon

Assertive China goes a great leap too far Sydney Morning Herald (hat tip reader Crocodile Chuck. The “China overreach” may be too optimistic a hope. This may be a clever way to selectively expropriate assets.

Read more: New York Times Ready to Charge Online Readers — Daily Intel http://nymag.com/daily/intel/2010/01/new_york_times_set_to_mimic_ws.html#ixzz0cx0w1ZGT

Ominous lessons of the 1930s for Europe Financial Times

ECB prepares legal ground for euro rupture as Greek crisis escalates Ambrose Evans-Pritchard, Telegraph. The headline and lead-in do sensationalize some sensible scenario analysis, but the substance is nevertheless interesting.

Sakakibara Says Slower U.S. Recovery May Hurt Dollar Bloomberg

Goldman Sachs bankers ’set for 81% rise in bonuses’ Guardian

Antidote du jour:

Looting Alert: Big Banks Threaten Constitutional Challenge to TARP Fee

The brazenness of the financial services industry knows no bounds.

The latest sighting comes in the form of a leak (or a plant? of the fact that Securities Industry and Financial Markets Association which is considering mounting a constitutional challenge to the proposed TARP fee of 15 basis points of uninsured liabilities announced last week.

The New York Times sets forth the logic, such as it is:

Wall Street’s main lobbying arm has hired a top Supreme Court litigator to study a possible legal battle against a bank tax proposed by the Obama administration, on the theory that it would be unconstitutional, according to three industry officials briefed on the matter….a bank tax might be unconstitutional because it would unfairly single out and penalize big banks.

The article does say clearly that this strategy would set large financial institutions against smaller ones, looked like a big stretch legally (constitutional law professior Lawrence Tribe was dismissive), and would further enrage a pretty cheesed off public.

So why is SIFMA giving this idea any consideration?

I have three possible answers: one is that the banksters have become so accustomed to getting everything they want that they are not prepared to be inconvenienced, and are willing to throw any and every possible roadblock to make that stance clear. A second possibility is that they see this sort of fee as establishing a precedent they do not like (more on that soon), and are therefore willing to engage in a disproportionate response to make sure it goes nowhere. The third is that this is simply Kabuki drama: the bankers are going to engage in ritual howls to convince the public that they are being treated horribly, when the fee is not that onerous and is sure to be watered down. This type of threat makes Obama look tougher than he is, and would help him solve his PR dilemma (that he has been far too accommodating to the banks, and now needs to look tough minded. So if the banks squeal, surely Obama is being hard on them, right?)

The first idea, that the banks have become habituated to getting their way, given the repeated, successful neutering of pretty much anything that looks like reform, the consumer financial services protection agency and derivatives being the showcases. One partial exception was that some of the worst credit card abuses have been curtailed. The flip side was that leaks from the bank stress tests presented the bankers as getting into regular, heated arguments with the Treasury. Back in the stone ages when I was young, no bank would dream of treating a senior regulator as an equal party, much the less getting pushy with them. So they could simply be reverting to form.

The second possibility, and this is consistent with the notion of arguing that the fee would discriminate against large banks, is that this fee would set a precedent that the banks might regard as dangerous. The fee applies only to banks with more than $50 billion in consolidated assets, and is 15 basis points of liabilities not insured by the FDIC. Now let us stress that 15 basis points is not a big charge; per the example shown (not terribly unrepresentative) it works out to 6 basis points across the entire bank.

The reason the banks may want to cut this sort of idea off early is that the Treasury allegedly has been planning for some time to make life difficult and expensive for very large financial firms. The idea is if they raise the cost of doing business for really big firms, they will be forced to become smaller to remain competitive, thus alleviating the TBTF problem. Put it this way: if McKinsey is talking about this stuff at alumni presentations (as it has been since at least last May) when McKinsey is advising the Treasury and the Fed (and the tone of the presentation is that this represented the Treasury’s plans), the plan to make it is already well known by those closer to the action.

Now this fee is hardly a big step down this road, but the view from inside the banking industry may be that any measures along these lines must be opposed.

Despite this talk of making it expensive to be TBTF coming from sources who clearly had the inside skinny, I discounted it when I heard it, simply because even as of then, the Administration had been so accommodating to the financiers I could not imagine it making such a radical change in course. And lobbyists might want to make sure absolutely no progress is made along this path.

As an aside, I’ve heard many commentators howl about the impact a move like this would have on lending, but I think they are barking up the wrong tree. Banks can borrow for nada from the Fed now and earn large spreads. If they are not lending now, it is that they see the prospective losses being high (accurate or overdone risk aversion).

I’d be curious to get feedback, but I think the bigger impact would be on the repo market. Banks and in particular broker dealers get a considerable portion of their funding through a pawn-shop like procedure in which they sell high quality instruments (originally only Treasuries) subject to an agreement to repurchase. Repos are used to raise cash that is then used as collateral (or securities that are accepted as repos are posted directly as collateral. A very big use is collateral for derivatives exposures.

Back to the main argument. The third possibility is that this is just posturing, I’m not certain how the winks and nods might have been exchanged, but the financial firms are playing along with the new “Obama is tough” posture to make him look like he has gotten a pound of flesh from them. The public will remember all the noisy protests, and won’t be paying attention when the legislation, which is not that tough, is inevitably watered down later. So Obama wins and the banks win. What’s not to like?

Obama has finally notched up his rhetoric to something that sounds serious, but given his history of bending over backwards, it will take a lot more than stern words to bring the industry to heel:

Those who oppose this fee have also had the audacity to suggest that it is somehow unfair, that because these firms have already returned what they borrowed directly, their obligation is fulfilled. But this willfully ignores the fact that the entire industry benefited not only from the bailout, but from the assistance extended to AIG and homeowners, and from the many unprecedented emergency actions taken by the Federal Reserve, the FDIC and others to prevent a financial collapse. And it ignores a far greater unfairness: sticking the American taxpayer with the bill.

Note this is the first time Obama has admitted to the banks getting tons of subsidies, much the less outlining the major types. Heretofore he has studiously avoided mentioning that, and has gone to great lengths to position the TARP as a profitable investment.

He must be getting desperate.

Update: I want to be clear that I don’t consider this measure to be well designed or thought out. This fee bears all the hallmarks of being devised quickly to create the appearance of Doing Something About Those Greedy Bankers. But what is disturbing, as James Kwak points out, is that this fee, despite the caviling, is that the funding advantage of large banks v. small has widened. It averaged 48 basis points from 2000-2007, and from 4Q 2008 to 2Q 2009, increased to 78 basis points.

Now the flip side is that measures like this, plus much greater capital requirements in general, and in particular on bigger firms, would force banks to save more of their profits and pay less in bonuses (you’d need to regulate them tightly to make sure they did not start making greater use of off-balance sheet vehicles to increase leverage). And I’d be much happier if the “TARP fee” were reconstituted as a “Yes, Virginia, We are Guaranteeing Your Liabilities Too Fee ” fee, as in insurance payments. While FDIC insurance regularly proves insufficient in a crisis, it’s better to have the industry at least paying some of its freight than none.

links for 2010-01-17

Links 1/17/10

Apologies for no substantive posts from me tonight! Am scrambling in preparation for being out of town for two weeks (yes I will be working, this is mainly a change of venue).

The Right Testicle of Hell: History of a Haitian Holocaust Greg Palast

Flattery Will Get You Far Scientific American (hat tip Michael T). Clearly there is no hope for yours truly!

Book Salon: Too Big to Fail FireDogLake

Will China squeeze the West on rare earth metals in the coming decade? Market Mine (hat tip reader Crocodile Chuck)

Google.cn is going rogue CNet Asia (hat tip reader Michael T). Hhm, this is an interesting strategy, act compliant and pretend to retreat (as in say you are hiking out of China) but actually defy the government. Too bad Team Obama isn’t taking notes. Maybe I am missing something, but the official US action looks ill advised: Beijing seeks to limit Google fallout Financial Times. A diplomatic protest? This does not wash. The US has no business making a diplomatic protest over a commercial matter, nor does it have any business protesting internal Chinese policies, at least via this route (how would we react if China filed a protest over US political opposition to CNOOC’s attempt to purchase of Unocal? The backlash was a big, if not the big, reason that bid failed). The Chinese do all sorts of horrid things, like harvest organs from prisoners that are still alive (but we are far from models on the human rights front, our self image to the contrary: one of the biggest, maybe now the biggest, % of population in prison; pretty much the only country save places like Somalia that allows minors to be executed). In terms of either human rights issues there are much better fights to pick, as well as on the commercial front (how about threatening to impose tariffs to compensate for the fact that China’s near total lack of environmental standards is a de facto export subsidy?)

Forget Gum. Walking and Using Phone Is Risky. New York Times

Franklin Roosevelt’s First Inaugural Address: A Fitting Reminder For Our Crisis Today Jesse

Hoisted from the Comments Economists for Firing Larry Summers

Obama confidant’s spine-chilling proposal and Krugman, Gruber and non-disclosure issues Glenn Greenwald. I was completely gobsmacked by Krugman’s evident lack of a moral compass (this is “ends justify the means” in fancy dress), and was glad to see Greenwald do the heavy lifting of taking his argument apart.

Antidote du jour (a very nice reader sent this link, and I can’t find his message to provide the h/t! So please forgive me, will amend if you e-mail me or tell me in comments):

links for 2010-01-16

Links 1/16/09

Google Reader has been down for the last half hour, of course, precisely when I want to use it. Grr.

KRASTING and COBERLY in COMPLETE AGREEMENT…well not exactly Angry Bear

‘Sorry’ still seems to be the hardest word on Wall Street Washington Post

Paul Volcker’s Moskowitz Lecture Rajiv Sethi (hat tip Richard Alford)

Big Banks Short Sell Fraud Michael Schussele

Instead of Taking Up Pilates, John Lanchester Wrote a Book About the Crisis Moe Tkacik

Hard Road Ahead Hoisington Investment Management (hat tip reader Nick)

How to Cure 1 Billion People?–Defeat Neglected Tropical Diseases Scientific American (hat tip reader Michael T)

Hallandale Beach grandma sent to jail — and forgotten Miami Herald (hat tip reader Michael T)

Jevons’ Law: Enforcing the Age of Energy Decline – Part 1 The Oil Drum

Lady BlahBlah Charles LeBow, New York Times

Larry Summers, Robert Rubin: Will The Harvard Shadow Elite Bankrupt The University And The Country? Harry Lewis, Huffington Post

Is this a recovery? Ed Harrison

Bernanke Gets Desperate (Fed Letter) The Daily Bail

If you want to get really ill about health care reform, you must read:

Health Bill Can Pass Senate With 51 Votes, Van Hollen Says Bloomberg As Marshall Auerback noted:

So now the Dems raise reconcilation? Why didn’t they do this before they threw out the Medicare buy-in option or capitulated to the grotesque bribes given to Ben Nelson and Mary Landrieu? Why didn’t Obama use this threat? Answer: the guy basically doesn’t want to offend ANYBODY! Pathetic. Gets worse every day this guy is in office.

How the White House Used Jonathan Gruber’s Work to Orchestrate the Appearance of Broad Consensus FireDogLake. Apologies for not seeing it earlier.

Antidote du jour:

links for 2010-01-15

Links 1/15/10

Arctic permafrost leaking methane at record levels, figures show Guardian (hat tip reader John D)

FCIC hearings must shatter the ’sociopathic nature’ of Wall Street Rob Johnson, New Deal 2.0

Europe cannot afford a Greek default Simon Tilford Financial Times (hat tip Swedish Lex)

So what are banks for, anyway? Marshall Auerback, New Deal 2.0

It’s Not About Interest Rates Yet Tim Duy

Google vs. CCP: All the possible WHYs Chinayouren (hat tip Michael T) and Google’s fight: US-China lock horns Sydney Morning Herald (hat tip reader Crocodile Chuck)

UK banks face $10bn bill from US over bailouts Times Online (hat tip Swedish Lex)

Reply to Krasting’s reply to Coberly’s reply to Krasting Dale Coberly Angry Bear

Why are we letting Wall Street off so easy? Joseph Stiglitz, Mother Jones (hat tip reader John D). Why is Stiglitz having to say this in Mother Jones?

Antidote du jour:
Picture 17

links for 2010-01-14

Links 1/14/10

Proof of Martians ‘to come this year’ Scientific American.

Scanners aren’t the solution Josh Fulton

Groups ask U.S. to regulate shipping of commercial bumblebees Washington Post (hat tip reader John D)

The Sky Is Falling Before Schedule. Again Dale Coberly, Angry Bear and I’m No Chicken Little Bruce Krasting. A running slugfest dialogue about Social Security. Bruce has the latest salvo; I’ll link to any update from Angry Bear.

Rehn to propose economic ‘high representative’ EurActiv (hat tip reader Swedish Lex)

If you could write a song about the financial meltdown, what would you say? Tim Solanic

The future of Tim Geithner James Pethokoukis

Too Big Too Fail Tax Barry Ritholtz. Far from the first argument along these lines, but Barry, as always, is colorful

John Paulson’s high-risk hubris Felix Salmon. High time SOMEONE is saying this! I just wish he had been even more pointed

The Carter Syndrome Walter Mead, Foreign Policy (hat tip reader Michael T)

Antidote du jour:
Picture 18

links for 2010-01-13

Links 1/13/10

The solar cell that builds itself BBC (hat tip reader Tim C)

Why Obama must take on Wall Street Financial Times

Researchers Create Subatomic Digital Switch h+ (hat tip reader Sugar Hush)

http://www.chinahush.com/2010/01/07/china-where-is-your-conscience-the-tragic-curtain-call-of-substitute-teachers/">China, where is your conscience? The tragic curtain call of substitute teachers China Hush (hat tip reader Michael T)

Did Low Interest Rates or Regulatory Failures Cause the Bubble? Mark Thoma. Um, this isn’t an either-or. False dichotomy. Which Thoma thankfully addresses.

Google’s puzzling logic Robert Peston

Links on inequality and the macroeconomy Steve Waldman

Europe needs educated Roma George Soros, Guardian

What causes mass unemployment? and Financial markets are mostly unproductive Billy Blog. This is a relatively new blog by Bill Mitchell at the University of Newcastle, NSW, Australia.

The Financial Crisis Inquiry Commission hearings will be televised on CSPAN and live streamed at the FDIC (hat tip reader Ann)

The People vs. Cap-and-Tax Jim Hansen. Wish I had time to do a proper post on this….another example of how programs believed to have better optics (because they have been touted aggressively by interested parties) are trumping better solutions. Big clue: a stable price for carbon, which is most assuredly NOT what you will get from cap and trade, is necessary for businesses to plan and make investments. And this is not just my view; the FT had a very good editorial on this two years ago.

Questions for the Big Bankers New York Times. Your humble blogger sticks nose into Times op-ed tent. Took quite a bit of back and forth with the op-ed editor (who was very nice and patient) to convert my question into something “that Times readers would understand” (and I had run it by several readers in advance, but I clearly had not “laified” it sufficiently). I hope it looks OK relative to other questions. I’m a little afraid to look.

Antidote du jour:

Picture 15

links for 2010-01-12

Links 1/12/10

Nurse Outduels IRS Over M.B.A. Tuition Wall Street Journal (hat tip reader Skippy). I wish her victory involved a more worthwhile degree.

Melbourne Swelters Through Hottest Night in a Century Bloomberg

How many more AIDS deaths? Lancet (hat tip reader Michael T)

New Money Satyajit Das

Bubble warning The Economist (hat tip reader Steve V). In case you missed it, the Economist is already calling a bubble…Ritholtz thinks this is contrarian, when in fact the last time the Economist was early. It pointed to the existence of a global housing bubble (without saying its demise was imminent) in June 2005.

Controversial research behind commodity rules: John Kemp Reuters (hat tip reader Michael)

China’s ‘black jails’ shove complaints into the dark Los Angeles Times (hat tip DoctoRx)

Component shortages set to push up computer costs Financial Times

3D technology finally hits the adult film industry Raw Story (hat tip reader John D). Gee, the adult entertainment business is usually early to implement new tech. What happened?

Yield curve can’t drive profits if banks won’t lend Rolfe Winkler

Not a Positive Economic Picture Michael Panzner

A Simple Model of Trading and Pricing Risky Assets Under Ambiguity: Any Lessons for Policy-Makers? Massimo Guidolin and Francesca Rinaldi, St. Louis Fed (hat tip reader DoctoRx). Um, I think this is what Keynes called a change in liquidity preferences in his General Theory.

The Bonus Boom Mother Jones

Antidote du jour:

Picture 14

links for 2010-01-11

Links 1/11/10

Biodiversity loss is ‘wake-up call’, warns UN BBC

Ant Has Given Up Sex Completely, Researchers Confirm Science Daily (hat tip reader Michael T)

Are Photo IDs a waste of time? h+ (hat tip reader David C)

Taliban make ‘undetectable’ bombs out of wood Independent (hat tip reader John D)

Factory Farmed Meat Can Trigger a Global Pandemic That Wipes Out Sixty Percent of Those Infected Truthout (hat tip reader John D). The headline is sensationalistic, but the fact set is not pretty.

New Study: Wal-Mart Brings Zero Jobs to Chicago Huffington Post. Frankly, it seems entirely logical that Wal-Mart would destroy jobs. The smaller retailers it displaces presumably have higher store staff costs relative to sales.

Disappointment ahead for UK — and big test for euro Anatole Kaletsky, Times Online (hat tip reader Albert S)

Sea slug steals genes for greens, makes chlorophyll like a plant Science News (hat tip reader Paul S)

The Shadow War : Making Sense of the New CIA Battlefield in Afghanistan Tom Engelhardt and Nick Turse (hat tip Crocodile Chuck)

Census as Jobs Program Still not Good Enough DoctoRx Uncle Sam is hiring more than twice as many workers in 2010 as it took to conduct the census in 2000.

Geithner Has Support of Obama, Democratic Lawmakers, Aides Say Bloomberg. Probably more important, no media follow through. Reader John L channel surfed the Sunday TV news programs and didn’t catch a single question re Geithner.

China banks eclipse US rivals Financial Times. Shades of Japan. In the years before the crash, Japanese banks were not just the highest market cap banks in the world, but among the highest cap companies. And we know how that movie ended. To give an idea of how rich three times book is, that’s the HIGH end of the range investment banks used to sell for (meaning that price includes an acquisition premium)….in the days when investment banks were vastly more profitable than commercial banks.

America slides deeper into depression as Wall Street revels Ambrose Evans Pritchard, Telegraph (hat tip reader Albert S). I had wanted to write a post on Friday’s tape painting (of course, it is ongoing, but Friday was SO blatant) but I ran out of steam.

The Americanization of Mental Illness New York Times. Today’s must read.

Antidote du jour:

Picture 12