MoA 2005 Census Thread
Now that we are all back from our holidays, and that we have all been perked up by Billmon's latest (see thread below), I'd like to organise a census of sorts to try to better understand who reads the site.
I'd like all readers to put one - and one only - comment in this thread with the number they are posting at (first comment will be "1", second "2", etc... just look at the number in the last available comment and add 1!). Post with your name if you don't mind, post anonymously if don't feel like leaving a name, but please don't post more than once if you don't leave a name, it would just waste the experiment for others.
"Count me in"
Posted by Jérôme à Paris on January 10, 2005 at 05:36 PM | Permalink | Comments (130)
Billmon: The Salvadoran Option
Billmon has a new post on the topic that already been mentioned in the threads: death squads.
Posted by Jérôme à Paris on January 10, 2005 at 01:49 PM | Permalink | Comments (37)
Boomers - the spoiledest generation?
Fully aware of stepping into a hornet's nest, let me give you some (voluntarily provocative) thoughts on the baby-boom generation. Please note that I have tried to list items that are true in most Western countries, and which should not be completely made false by local histories or circumstances.
Do not complain that this is an exageration, of course it is! But can you point to opposite items? Do you want to?
- they have grown up in a time of major growth, thus living their childhood in ever-improving prosperity and in an atmosphere of progress and economic optimism.
They were thus the first generation to have the luxury to revolt against the materialistic preoccupations of their parents while fully benefiting from these material advantages (and not having lived through the Depression and war like their parents)
- they had the incredible chance of living their 20s after the pill and before AIDS, thus being the first generation (and only one so far) able te enjoy sex without limitation and almost without consequences;
- after having experimented with abandon every kind of ideology and -isms, made divorce, single-parent families and criminality grow exponentially, and been generally irresponsible for most of their life, they have lately become "born-again" and are trying to push back medieval morality on the rest of the population ("family values", "war on drugs", welfare reform)
- after having sent their black or poor neighbors fight the Vietnam War, they discredited their military until a few terrorists smacked them in the face, and it suddenly became fashionable - and necessary - for them, fully in power, to use the full force (and more) of the US military to kick Arab ass indiscriminately
- in Europe at least, the social net overwhelmingly favors them, by makingtheir jobs almost untouchable while putting all the needs for flexibility of the economy on the young (who cannot find a stable job easily) and the old (who were kicked out into early retirement or irremediable unemployment).
- they are the first generation to live at a time when (i) there is a retirement age (ii) people live longer than that age and (iii) the system is able to fund their pensions by contributions by those following them - and they could well be the last, as they are keen to let other generations pay - again - for their old age.
- after having been pampered anti-capitalist lefties in their youth, they became ruthless corporate overachievers, and were in charger of the large scale rightist attempt to push back the social net they benefited from but want to deny to others. The massive stock market and housing bubbles this has created have allowed them to capture a huge portion of the wealth (overvalued stocks and houses), at the expense of the young who cannot afford to buy housing or save with a perpective of decent returns
In a word, they are spoiled kids who had everything handed to them on a platter and do not want to share with others.
Please rebut!
Posted by Jérôme à Paris on January 9, 2005 at 08:01 AM | Permalink | Comments (41)
Non-Marx Open Thread
For all other topics...
Let's keep the political philosophy to the previous open thread, or move it to Le Speakeasy (I have opened a thread here
Posted by Jérôme à Paris on January 9, 2005 at 03:52 AM | Permalink | Comments (97)
Markets 2005
To get some ideas about this year’s financial markets, I looked around my favourite pessimists and contrarian commentators and here are some of their and my thoughts.
In an earlier open thread I had posted Marc Faber's December comments. He expected the Dollar to rise and the stock market to drop. The first week of January saw this happen and made me some change. Dr. Faber's advice for the beginning of 2005:
In 2003 and 2004, all asset classes rose in value while the US dollar sold off. Would it be possible that in 2005, all asset classes perform poorly while the US dollar strengthens?? Only time will tell but for now, I would stay aside from equities, commodities (including gold and silver), and bonds and only hold the US dollar, which may have more of a rebound potential than is generally expected. As a trade, I would consider shorting the British Pound against the US dollar since the British price level is now so much higher than the one in the US.
I do see this as a trading advice, not an investment advise. If your time horizon is several years, and you do not have the time and/or knowledge necessary to trade, you should be in Euros or CanDos and an US$ counter trend rally here is no problem. The fundamental problems in the US$ have not changed and the longterm trend for the US$ will most likely be down.
Commodities and precious metals had a good year but probably hit a medium cyclical top for now. At least that is what cyclesman Tim Wood is saying. This does not mean they will go down as much as they went up, but they may rest for some month before the next run up starts. Commodities have major twenty year long up cycles and we are only in year 3-4 of the current cycle right now. So I do not worry and stick to my Gold.
Oil is the big wild card. Some OPEC countries have said they do want oil to stay above US$ 40/barrel. Morgan Stanley sees oil at US$ 35 at the end of the year, but that excludes a risk premium and any expectation of further Middle East problems. Energy analyst Bill Powers is betting on up to US$ 80 per barrel (he was right with a $50 call for 2004 last January). US action against Iran, to be expected after the Iraq election turns out to have worsened the situation there, will make sure that at least $70/b will be achieved in 2005.
There are massive structural problems in the United States. The Fed induced credit bubble after credit bubble and will someday have to face the consequences. From too much credit comes too much consumption. Kurt Riechenbaecher puts the structural problems in Hayek's words
To American economists, this idea that over time, excessive consumer spending leads to recession and worse, by crowding out capital investment may seem preposterous. Widely unknown, it happens to be the central idea that F.A. von Hayek developed in his famous lectures at the London School of Economics in 1931.
In essence, he explained in great detail that an increase in consumer demand at the expense of saving will inevitably lead to a scarcity of capital, which forces a "shortening in the process of production," and so causes depression. Putting it in simpler parlance: Excessive consumption inevitably crowds out business investment. As a share of GDP, consumption in the United States is presently excessive as never before. And it keeps worsening.
The Fed now has finally turned its head towards the problem. In the recently released minutes of the last policy meeting the Fed mentions "excessive risk taking" in the markets. Stephen Roach from Morgan Stanley interprets and welcomes this as a signal for accelerated tightening by the Fed. His conclusion: Game Over. With higher Fed rates and tightening credit conditions the (house) equity and consumption bubble will burst, taking the stock and bond markets down to much lower levels.
Bill Gross of Pimco agrees especially on bonds and emerging market debt. He prefers to put the billions he manages into cash and German bunds.
Some people assume that Bush's attempt to reform (read kill) Social Security by introduction of some kind of special private saving will bring a boost to the stock market. I believe this much discussed Social Security reform will go nowhere and end as a big fizzle. If Stelzer in the Weekly Standard agrees with Krugman in the The Economists' Voice about Social Security reform being a bad idea, how can you expect that the people in Congress will come to a different conclusion? All facts point against Bush's plan and unlike Bush, these folks have to care about getting reelected.
My conclusion for now: There is US$ counter trend rally that has some month to go and may be good for some more trades. Commodities and precious metals will rest for a while now so I will just stick to what I own. Oil may be volatile but will rise far above $50 again. I will buy on dips. The Fed will tighten more than the market expects and there will be blood on the floors of the bond and equity markets. The timing for shortening these markets is difficult and being wrong a month or two can be very expensive (just don´t ask how I know). So for now I just watch and keep some cash ready to jump on the short side when it looks save to do so.
Posted by b on January 8, 2005 at 03:34 PM | Permalink | Comments (18)
Schwerpunkt
We do know from several reports that there are signs of malnutrition in Iraq. Recently USA Today reported:
A study by a Norwegian institute says the percentage of Iraqi children ages 6 months to 5 years suffering from malnutrition has nearly doubled to 7.7% from 4% in March 2003
Of course we like to see such compassion as describe in yesterdays (here slightly shortened) AP story:
An impromptu relief effort was mobilizing Thursday in southern Nevada after an Army Reserve officer sent home a plea for food to feed starving Iraqi ...
Army Reserve Capt. Gabriella Cook begged her friends to come to the aid of undernourished. She said the Iraqi ... have been eating table scraps and garbage.
Cook wrote in an e-mail to friends in Las Vegas and Henderson. "Some of them have already died. Half of them are sick. We have no way of buying any actual food here."
The Las Vegas Valley Humane Society was swamped with offers of cash and bags of food after a Nevada newspaper on Wednesday reported Cook's plea.
Judith Ruiz, president of the nonprofit humane society, accepted a $5,000 check from a Las Vegas sports gambling handicapper and said she was trying to arrange transportation for the food.
Cook was elated, said Diana Paivanas, a friend in Las Vegas who said offers of help came from people in states including New Hampshire, Florida, Texas, Ohio and New York. Paivanas said pallets of food had been contributed, and the humane society was looking for storage space while awaiting shipment to Iraq.
But military spokesman Staff Sgt. Don Dees said Thursday the care and feeding of Iraqi ... was separate from U.S. military.
Now, like Mrs. Cook, we do like dogs, but has she and the US military really understood Carl von Clausewitz and the Concept of Schwerpunkt, the focal points where certain forces come together, in their Iraq endeavors?
Posted by b on January 7, 2005 at 06:04 AM | Permalink | Comments (13)
Open Thread 05-02
For your wisdom, rage or fun
Amazing first hand account of the tsunami
Posted by Jérôme à Paris on January 6, 2005 at 05:15 PM | Permalink | Comments (128)
Harz IV vs Bofinger
I am stepping into a topic I am not completely familiar with, and I hope that the German barflies amongst us will step in with authoritative comments and more links, but it is certainly worth a mention and a discussion.
On 1 January, a new reform package, called "Harz IV" (named after the guy that led the effort to prepare the reforms, Mr Harz, a former VW executive if I remember correctly) came into force. The main effect is to reduce the payouts to unemployed people, especially for the long term unemployed, and to make it generally more difficult to refuse a job offer, hower inconvenient, if you are unemployed. There has been strong protest, especially in the East, but the government held firm and this is now in force, a significant part of the reforms that are supposed to make Germany's "rigid" economy more competitive.
And now the FT brings to us the position of Peter Bofinger, a well-known economist and one of the "wise men" (a group of top independent economic analysts), who basically says that these reforms are not really the solution to Germany's problems:
Mr Bofinger, a "wise man" since March, argues that mainstream German thinking has led to a nation of consumers saving aggressively rather than spending, in fear of the future. Germany is expected to be at the bottom of the European growth league this year."We are now one of the most competitive countries in the world," Mr Bofinger told the Financial Times. "The problem is that we have been very much focused on external demand . . . Germany is not like Ireland or Denmark. It is a country where the domestic market counts much more than the external market."
To some observers, Mr Bofinger is simply a maverick in demanding stronger wage increases to boost internal demand - a similar stance to that of Oskar Lafontaine, the leftwing finance minister who resigned in 1999.
(snip)
Meanwhile ordinary Germans have yet to see the fruits of years of labour market, tax and social security reforms: figures yesterday showed unemployment still rising.
"France is really lagging in reforms - but its economy is doing rather well," Mr Bofinger said. Reforms are needed, he agreed. The problem is that demand for German exports is not feeding through into higher wages and thus internal demand. "With the exception of Japan, our salaries are increasing less than in any other OECD country. Net real wages are stagnant or even declining."
He proposes a return to a "productivity-orientated wage policy" across the eurozone. Wages, he suggests, should rise by the rate of productivity growth plus about 2 per cent - the rate of inflation targeted by the European Central Bank. For less competitive eurozone members, that would still mean moderate wage rises. But Germans would be substantially better off while "improvements in competitiveness that have been made in the past few years would be maintained".
The interesting theme is one we have heard recently in Argentina as well (and which was also pushed by the Socialists in France in 1997-2002): financial reform should not be an end to itself, and the cure can kill off the patient (but "he dies in good health", as one wag put it). Domestic demand, coming from wage increases and the like, can have a much more positive effect on growth and prosperity than financial orthodoxy. Morale boosting measures, whether voluntary (postive discourse, accompanied by symbolic or real feel-good measures, such as the 35 hour week) or not (France winning the world cup in 1998 is a typical example) have a much bigger effect...
While I have trouble accepting that idea (in many ways, it is similar to the Reagan "voodoo economics", trickle down, etc... - spend like hell, and growth will catch up and justify it all), it appears to work in some circumstances. The trick is to find the right ones.
Basically, you should have lower than expected demand and a not-too-unsound budgetary balance that allows you to spend more without worrying too much about long term consequences, and ideally an external shock to justify it all. Bush actually had the perfect scenario back in 2001 (9/11 was a shock to the population and the economy, which could be compensated for by injecting extra public spending - and the budget was in surplus), but he blew it in favor of highly partisan - and highly ineffective tax cuts for the rich. On the other hand, if it is not done properly, for instance if the financial situation is already so dire that your effort is half-hearted and nobody believes it is sustainable, then it gets only worse.
The lesson for Germany is that it should not worry so much about the outside world anymore. The euro has made its "domestic market" so much bigger that it should abandon the psychology of a smallish, open economy. Europe, like the USA, is a big, not so open economy (not so open simply in the sense that trade with the rest of the world does not represent such a big share of GDP - 10% or so insterad of 30% for Germany alone and much more for samll countries like Belgium or singapore).
Live your life, stop worrying!
Posted by Jérôme à Paris on January 5, 2005 at 05:19 PM | Permalink | Comments (5)
Coal prices double
From today's Financial times: Posco to pay double for Australian coal
Posco, the world's fifth-largest steelmaker, has agreed to pay more than twice as much for high quality coal from Australian suppliers, in a deal that underlines the tight global supply of commodities.
The South Korean steelmaker yesterday said it would buy bituminous coal from BHP Billiton and Rio Tinto at $125 per tonne from April, up from $57.5 per tonne. "Raw material prices have surged as global demand exceeds supply," Posco said.
Why is this important? After all, this means first of all that Korean steel will get more expensive, thus probably also Korean cars ; that's good for US exports, right?
Well, the first problem is that steel being a commodity, the price rises will apply to everybody - eventually (Posco agrees here to pay a little bit more to guarantee its security of supply), and there will be no competitive advantage for anybody - only bumper profits for those that control the natural resources (that's good for Australia, Russia, maybe Canada and a few others), and increased costs - inflation - for everybody else.
The other big problem is that about 50% of US electricity supply comes from coal-fired power plants. Coal price increases, together with the natural gas price increases which have also taken place (gas-fired plants being the second source of electricity) mean that electricity prices are very likely to go up in the near future. This has mostly stayed under the radar so far because (i) retail prices are quite strongly regulated (ii) long term supply contracts mean that price increases take more time to feed through (iii) over-investment in the late 90s has led to temporary over-supply and depressed the electricity markets for several years.
This will not last. Expect one more item of negative economic news - and one that will hurt everybody, and especially the poorest - to the long list of unbalances threatening the US economy. I honestly don't understand why US economists are almost unanimously optimistic about economic prospects.
Posted by Jérôme à Paris on January 5, 2005 at 05:22 AM | Permalink | Comments (19)
Useless Statistical Almanach
I plan to make this a regular feature of the site (probably once a week), if you don't mind, and I hope that some of you will contribute with their own examples.
The idea is to use (simple) statistics in a way rarely seen elsewhere to put things in a different perspective and gain insights on our world.
So, here we go:
Average number of deaths in the USA, per day: 7,000
(pop. 288M, death rate 8.3/1000/year)
Average number of deaths in Indonesia, per day: 4,500
(pop. 217M, death rate 7.3/1000/year)
Deaths on 9/11: 3,000, i.e. a 40% increase on the US daily average
Deaths from the Tsunami in Insonesia: 100,000, i.e. more than 20 times the daily norm.
In a graph of actual daily deaths, 9/11 would not really stand out that much, as such "unusual" daily death rates happen several times a year for purely statistical reasons (especially as you consider that you have 20% more deaths in the winter than in the summer).
And yet, which event has the biggest political consequences worlwide? Are the causes of an event (human vs nature) more important than its actual consequences? Are such physical, visible results less important than the (human, political) interpretation that is made of them? Is this right?
And do you think that the tsunami is so noticeable that it will actually have some geopolitical ramifications and make this example moot?
Posted by Jérôme à Paris on January 4, 2005 at 12:55 PM | Permalink | Comments (37)
Open Thread
For your wisdom, rage or fun.
A few tidbits:
IDF urges crackdown on settler violence
Sandra Bullock donates 1m$ for tsunami
Weight Watchers only diet program that works
Posted by Jérôme à Paris on January 4, 2005 at 06:16 AM | Permalink | Comments (91)
Liberté, Egalité, Absurdité
Don't blame me for starting a debate on relations between France and the USA today, blame the New York Times and this mystifying hit-and-run piece.
There is so much to argue in this article, which I will only go into in the comments section, but I am more intrigued by the timing of such an article: who wants to stoke up the flames of resentment against France? What's the ultimate goal behing this? Is this part of the general campaign to go and wage war in Iran (which is specifically mentioned in the article, albeit in an unusually complimentary way as regards France's role there)? Is it part of the silly game of one-upmanship between various countries on who-is-helping-Asia-the-most? Is it a salvo in the diplomatic game surrounding the possible reorganisation of the UN Security Council?
Or is it just a pleasant, "feel-good" way to start the new year with some harmless bashing of the least politically correct group around?
Please help me make sense of it!
Posted by Jérôme à Paris on January 3, 2005 at 09:12 AM | Permalink | Comments (38)
When They Took the Jews, I Remained Silent ...
I know that not many of you are around these days with the holidays, and I intended to wait a little bit before posting again, but this is just too fucking outrageous:
WASHINGTON (Reuters) - The Bush administration is preparing plans for possible lifetime detention of suspected terrorists, including hundreds whom the government does not have enough evidence to charge in courts, The Washington Post reported Sunday.
We already had an inkling a few weeks back when the concept of "unarmed sleeper cells" was used to describe civilians in Fallujah.
When they killed civilians in Fallujah, I did not speak up, because I am not a Fallujahn
When they decided to indefinitely detain Gitmo prisoners, against the rules of the Supreme Court, I did not complain, because I am not in Gitmo...
etc...
Who's next, until it's our turn (and still nobody complains)?
Posted by Jérôme à Paris on January 2, 2005 at 04:28 AM | Permalink | Comments (25)