Category: News

  • What links the banking crisis and the volcano ?

    The Guardian has George Monbiot’s latest installment of his long campaign against the global airline industry – What links the banking crisis and the volcano?. I don’t really agree with his conclusion – in the long run we’ll find that we can electrify most forms of transport and air travel will consume much of our (vastly reduced) liquid fuel production.

    We have several such vulnerabilities. The most catastrophic would be an unexpected coronal mass ejection – a solar storm – which causes a surge of direct current down our electricity grids, taking out the transformers. It could happen in seconds; the damage and collapse would take years to reverse, if we ever recovered. We would soon become aware of our dependence on electricity: an asset which, like oxygen, we notice only when it fails.

    As New Scientist magazine points out, an event like this would knacker most of the systems which keep us alive. It would take out water treatment plants and pumping stations. It would paralyse oil pumping and delivery, which would quickly bring down food supplies. It would clobber hospitals, financial systems and just about every kind of business – even the manufacturers of candles and paraffin lamps. Emergency generators would function only until the oil ran out. Burnt-out transformers cannot be repaired; they must be replaced. Over the past year I’ve sent freedom of information requests to electricity transmitters and distributors, asking them what contingency plans they have made, and whether they have stockpiled transformers to replace any destroyed by a solar storm. I haven’t got to the end of it yet, but the early results suggest that they haven’t.

    There’s a similar lack of planning for the possibility that global supplies of oil might soon peak then go into decline. My FoI requests to the British government reveal that it has made no contingency plans, on the grounds that it doesn’t believe it will happen. The issue remains the preserve of beardy lentil-eaters such as, er, the US joint forces command. Its latest report on possible future conflicts maintains that “a severe energy crunch is inevitable without a massive expansion of production and refining capacity”.

    It suggests that “by 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10m barrels per day”. A shortage of refining and production capacity is not the same thing as peak oil, but the report warns that a chronic constraint looms behind the immediate crisis: even under “the most optimistic scenario … petroleum production will be hard pressed to meet the expected future demand”. A global oil shortage would soon expose the weaknesses of our complex economic systems. As the cultural anthropologist Joseph Tainter has shown, their dependence on high energy use is one of the factors that makes complex societies vulnerable to collapse.

    His work has helped to overturn the old assumption that social complexity is a response to surplus energy. Instead, he proposes, complexity drives higher energy production. While complexity solves many problems – such as reliance on an exclusively local and therefore vulnerable food supply – it’s subject to diminishing returns. In extreme cases the cost of maintaining such systems causes them to collapse. …

    For the third time in two years we’ve discovered that flying is one of the weakest links in our overstretched system. In 2008 the rising cost of fuel drove several airlines out of business. The recession compounded the damage; the volcano might ruin several more. Energy-hungry, weather-dependent, easily disrupted, a large aviation industry is one of the hardest sectors for any society to sustain, especially one beginning to encounter a series of crises. The greater our dependence on flying, the more vulnerable we are likely to become.

    Over the past few days people living under the flight paths have seen the future, and they like it. The state of global oil supplies, the industry’s social and environmental costs and its extreme vulnerability mean that current levels of flying – let alone the growth the government anticipates – cannot be maintained indefinitely. We have a choice. We can start decommissioning this industry while there is time and find ways of living happily with less of it. Or we can sit and wait for physical reality to simplify the system by more brutal means.


  • “South Park” Prophet Mohammad Episode “CENSORED” After Threats From Radical Muslim Group


    Has South Park gone too far this time?

    Producers of the irreverant Comedy Central series South Park beeped out the words Prophet Muhammad and plastered its Wednesday episode with the word “CENSORED” after being issued a grim warning by a radical New York-based Muslim group this week.

    In a description of last night’s episode, the network wrote: “South Park is in danger from angry celebrities, violent Ginger kids and Mecha Streisand in an all-new episode titled ‘201,’ premiering on Wednesday, April 21 at 10PM on Comedy Central. It’s a tense situation in South Park as Muhammad has become the pawn in the game to save the town. The Ginger kids are threatening to destroy the city if Stan and Kyle don’t hand over the Prophet and the celebrities have met violence with violence by unleashing Mecha Streisand.”

    Revolutionmuslim.com criticized the show for including a satirical discussion on whether an image of the Prophet Mohammed could be shown, and a posting on the website now warns South Park creators Trey Parker and Matt Stone that their flippancy could make them the targets of violent attacks.

    “We have to warn Matt and Trey that what they are doing is stupid and they will probably end up like Theo Van Gogh for airing this show,” the message read, referring to a Dutch filmmaker who was murdered after making a film about violence against women in some Islamic societies. “This is not a threat, but a warning of the reality of what will likely happen to them.”

    The website warning followed the first in a two-part episode of South Park (entitled “201″) a week ago in which Prophet Mohammad was depicted in a bear outfit. The statement posted the address of South Park creators Matt Stone and Trey Parker’s Los Angeles production studio, however a spokesman for the group denied the statement was a threat against the animators.

    “Revolution Muslim only wants those offended to be able to voice their opposition by letters to the show’s creators,” a spokesman told CNN Wednesday.


  • Democrats Malloy, Glassman Criticize Securitization, Which Is Part of Democratic-Written Budget That Rell Did Not Sign

    Two prominent Democratic candidates for governor – Dannel Malloy and Mary Glassman – both sharply criticized the state’s practice of borrowing money for operating expenses that is part of the Democratic-written budget that Republican Gov. M. Jodi Rell would not sign.

    Malloy and Glassman rejected the practice known as “securitization” during a gubernatorial forum Wednesday at the University of Connecticut’s law school in Hartford’s West End. Four Democratic candidates appeared separately from seven Republican candidates in back-to-back debates in front of about 200 UConn students, alumni, and officials on the law school’s 21-acre campus.

    Malloy, who served as Stamford’s mayor for 14 years, said that securitization is “really bad public policy.” 

    In the budget for the 2011 fiscal year, the state legislature filled a hole of $1.3 billion by promising to borrow money that would be paid off with money from various state revenue streams. Those revenue streams are not specified under state law, and Rell and the legislators are currently debating over exactly how the hole should be filled.

    At the Capitol, each side has blamed the other recently over securitization as no one wants to claim authorship of the idea.

    Rell originally called for using money generated from legalizing the keno gambling game, but Democrats have sharply rejected that idea. Instead, they have called for using fees paid by customers of Connecticut Light & Power Co., which has prompted a campaign of radio commercials and newspaper advertisements that strongly criticize the idea.

    “Securitization – really what it means is stealing,” Glassman said during the forum. “We stole those monies.”

    In an interview after the debate, Glassman said, “We cannot keep stealing from the future to pay for the past. We cannot keep doing it.”

    Malloy and Glassman were runningmates during the 2006 Democratic primary before Malloy lost the race against New Haven Mayor John DeStefano. Glassman, however, won her primary for lieutenant governor and then became DeStefano’s runningmate in the eventual race against Rell.

    The two Democrats were joined on stage by Rudy Marconi, who has served as Ridgefield’s first selectman for the past 11 years, and former state Rep. Juan Figueroa, who is taking a leave of absence from a universal health care foundation to run for governor.

    The Democratic frontrunner in the polls – Greenwich cable television entrepreneur Ned Lamont – did not attend because of a scheduling conflict. His spokeswoman, Justine Sessions, declined to detail the nature of the conflict or say where Lamont was on Wednesday. Lamont, she said, has already participated in more than 15 multi-candidate forums over the past several months and will be attending another one at 2 p.m. Saturday at Shepaug Valley High School in the Litchfield County town of Washington.

    “If I had anything to do with Ned not showing up, I apologize,” Malloy said in his opening remarks to the crowd.

    The Democratic debate followed a forum by seven Republicans who are seeking the party’s nomination at the convention on Saturday, May 22 in Hartford.

    The Republican front-runner in the polls, Tom Foley of Greenwich, and Lt. Gov. Michael Fedele of Stamford both said they would first push for cutting spending instead of raising taxes.

    “Revenue is not the answer. That’s the easy cop-out,” Fedele said.

    When some candidates said the state does not have a revenue problem, longtime business executive Oz Griebel of Simsbury said the state in fact does have a revenue problem because 100,000 unemployed citizens are not paying income taxes and sales taxes at the levels that they have in the past.

    Former U.S. Rep. Larry DeNardis, who has served as a state senator and university president during his long career, noted that the candidates have not unveiled precise, line-by-line plans that would fill the state’s projected $3.8 billion deficit for the 2012 fiscal year.

    “No one has a satisfactory answer. I don’t,” DeNardis told the crowd. “This will be the most difficult year in Connecticut history.”

    When the candidates were asked how to keep higher education affordable, Danbury Mayor Mark Boughton was the sixth person to speak.

    “I’m not sure if I heard an answer,” Boughton said to the crowd.

    A crucial way to hold down college costs at UConn and the Connecticut State University system, he said, is to moderate the lucrative pensions and benefits of the employees of the public universities. Boughton is a graduate of Central Connecticut State University in New Britain.

    “I don’t think we have a choice,” Boughton said after the forum. “That’s one of the drivers of the budget. … Some of the salaries tend to butt up against the absurd.”

    The candidates were introduced by UConn president Michael Hogan, who mispronounced the names of Boughton, Griebel, and journalist Keith Phaneuf, who was one of the questioners at both debates.

  • 2010/2011 Volkswagen Phaeton

    2010 Volkswagen Phaeton

    Details with the next generation 2011 Volkswagen Phaeton have surfaced on to the Internet. Sources report that the facelift version 2011 Volkswagen Phaeton will debut at this year’s Auto Show in Beijing which starts April 25th and this revised model comes after 8 years since the company entered the luxury saloon segment.

    The 2011 Volkswagen Phaeton will feature a front fascia that resembles the rest of the company’s models, with LED daytime runing lights and taillights and assembly will take place at a new plant in Dresda.

    As far as engine options the 2011 Volkswagen Phaeton facelift will be fitted with the new 3.0-litre TFSI V6 unit (both diesel and petrol version) that was recently introduced on the 2011 Audi Q7 at the Auto Show in Leipzig.

    Official details and photos with the 2011 Volkswagen Phaeton facelift will get revealed as the debut date approaches.

    Text source

  • Earth Day 2010

    Earth Day 2010 logo

    Happy Earth Day !!

     Today is the  40th anniversary of Earth Day !!

    – What will you do today, and going forward for Earth Day?
    – Use a reusable cup instead of a throw away one use cup ?
    – Take public transportation or walk rather than drive by car?
    – Car pool rather than drive alone? 

    To learn more about Earth Day 2010 and things ** YOU ** can do … LINK

     

    Via: Earth Day 2010  LINK

  • Earth Day 2010 Is April 22!

    Mornin’ PopCrunchers,

    We hope you didn’t forget that today, Thursday, April 22, is the 40th anniversary of Earth Day. Please remember to be extra kind to our beautiful Planet as you go about your day. Feel free to visit USATODAY.com and EarthDay.org for a complete history on this annual day of environmental awareness and to find out way that you can get involved!


  • Vodafone Ad Uses Rube Goldberg Machine to Show Awesomeness of Apps [Video]

    I do love a good Rube Goldberg Machine example. While not as grand in scale as OK Go’s, Vodafone Italy‘s commercial looks like it was insanely fun putting together—all those smartphones, in one room! Working together! Amazing. More »







  • Ann Williams, Martha Minow on Obama Supreme Court short list; half of contenders linked to Chicago

    WASHINGTON — Two more contenders with Chicago ties surfaced Wednesday on President Obama’s Supreme Court nominee short list: federal appeals Judge Ann Williams and Harvard Law School Dean Martha Minow, the Chicago Sun-Times has learned.

    Of the 10 leading potential nominees to replace retiring Justice John Paul Stevens — a Chicago native — five have significant Chicago links: Williams, on the Chicago-based U.S. 7th Circuit Court of Appeals; Diane Wood, also on the 7th Circuit; Solicitor General Elena Kagan, a former professor at the University of Chicago Law School; the Lincolnwood-raised Merrick Garland on the D.C Court of Appeals, and Minow, a New Trier East graduate, class of 1972.

    Minow earlier this month was sworn in as an Obama appointee to the Legal Services Corp., where she is vice chairwoman. Minow is the daughter of Newton Minow, former chairman of the Federal Communications Commission and a senior counsel at Chicago’s Sidley Austin. When Obama was at Harvard Law School, Minow recommended that Sidley hire him for a summer job in Chicago. Obama took the job and met his future wife, Michelle, at the firm.

    Williams was mentioned last year as a possible replacement for Justice David Souter in the appointment that went to Justice Sonia Sotomayor.

    Williams was nominated by President Ronald Reagan to the District Court for the Northern District of Illinois, where she was the first African-American woman to serve in the circuit. She was elevated to the appellate court by President Bill Clinton. A former third-grade teacher in Detroit, she was an assistant U.S. attorney in Chicago before becoming a judge.

    Obama on Wednesday said he would decide on a nominee by next month. He said he was not going to apply any abortion-rights “litmus tests.”

    “But I will say that I want somebody who is going to be interpreting our Constitution in a way that takes into account individual rights, and that includes women’s rights,” he said. “That’s going to be something that’s very important to me.”

  • Another “Madonna” Tribute Heading To “Glee”

    Madge says, “More Glee, please!”

    Ryan Murphy, creator of the FOX musical hit Glee, is already in talks with The Queen of Pop to stage a sequel to “The Power of Madonna,” the show’s 60-minute tribute to the music of The Material Girl, which aired to rave reviews on Tuesday night.

    Glee’s Madonna special, which featured the critically-acclaimed cast performing some of the superstar’s biggest songs, was also a big hit among TV viewers – 13.5 million people tuned in to see the episode.

    And that’s precisely why Ryan’s hoping to pack even more of Madonna’s hits into a proposed upcoming sequel.

    “Madonna and her people are into it and want it to happen,” he revealed to Entertainment Weekly on Wednesday.


  • Morgan Stanley: Any Way You Slice It, Disinflation Is The Bigger Issue Than Inflation

    Morgan Stanley shows how U.S. inflation has fallen no matter who you look at the data. They expect core inflation to continue falling, to about 1%. At some point it will start rising again, but we’re not quite there yet.

    Morgan Stanley’s Richard Berner:

    Will the real core inflation measure please stand up? Core inflation has declined over the past year. Depending on the metric, however, the deceleration in rents has accounted for most – or more than all – of the decline. Differences in inflation measures have triggered a debate about how to measure core inflation that has obscured the real controversy about the inflation outlook. In our view, the factors influencing this outlook are what really matters.

    Chart

    Two lessons from the measurement debate: First, investors should look to a variety of core inflation measures to judge short-term inflation trends, rather than relying exclusively on any one gauge. While the Fed must pick one metric to communicate its forecast and implied inflation target, officials are well aware of the pitfalls of measurement. Second, sharp data revisions have in the past affected the Fed’s preferred price index, the personal consumption price index. These revisions can significantly affect perceptions about inflation risks, so it is important to assess the variation in the PCEPI in comparison with other measures.

    (Via Morgan Stanley, US: Don’t Be Sidetracked By The Inflation Measurement Debate, Richard Berner, 21 April 2010)

    Join the conversation about this story »

  • GPS Angel Saves You From Red Light Cameras

    2D7684D3-F2AF-41CC-AD3B-3E5F7C2BC97E.jpg

    Now let’s just say this upfront: the best way to avoid a traffic ticket is to not speed and to not run red lights. But if you’re a leadfoot who just can’t help himself, the GPS Angel is for you.

    This compact, cordless device uses advanced SiRF Star III GPS satellite technology to map your vehicle’s current position against an on-board database of over 6,000 known red light camera and speed camera locations. When approaching one of these high risk intersections, GPS Angel will automatically alert the driver through a series of visual and audible alerts.

    6418C57C-2F8A-472C-B2A0-855D31A6B437.jpg

    Unlike other products that charge monthly fees, GPS Angel offers unlimited free access to the database. Simply plug the USB cord into your PC and download the updates from the Internet.

    Drivers can search and browse this extensive list of camera locations online at www.gpsangel.com. In addition to the database, users can set up Personal Location Alerts that warn the driver when they are speeding in areas such as school zones, playgrounds, parks or any other predetermined locations.

    Unlike radar detectors, the GPS Angel is 100% legal throughout North America (for now!).

    Related posts:

    1. Speeders Rejoice: The Red Light Camera Detector is Here
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    3. Watch Live TV on Your iPhone

  • Obama to Wall Street: free market not “free license to take whatever you can get” Excerpts

    WASHINGTON–President Obama pressures Wall Street Thursday on his financial reform package.

    Obama is expected to say in his speech: “I believe in a strong financial sector that helps people to raise capital and get loans and invest their savings. But a free market was never meant to be a free license to take whatever you can get, however you can get it. That is what happened too often in the years leading up to the crisis. Some on Wall Street forgot that behind every dollar traded or leveraged, there is family looking to buy a house, pay for an education, open a business, or save for retirement. What happens here has real consequences across our country.”

    Below, from the White House….

    EXCERPTS – Remarks of President Barack Obama

    Wall Street Reform at Cooper Union

    One of the most significant contributors to this recession was a financial crisis as dire as any we’ve known in generations. And that crisis was born of a failure of responsibility – from Wall Street to Washington – that brought down many of the world’s largest financial firms and nearly dragged our economy into a second Great Depression.

    It was that failure of responsibility that I spoke about when I came to New York more than two years ago – before the worst of the crisis had unfolded. I take no satisfaction in noting that my comments have largely been borne out by the events that followed. But I repeat what I said then because it is essential that we learn the lessons of this crisis, so we don’t doom ourselves to repeat it. And make no mistake, that is exactly what will happen if we allow this moment to pass – an outcome that is unacceptable to me and to the American people.

    As I said two years ago on this stage, I believe in the power of the free market. I believe in a strong financial sector that helps people to raise capital and get loans and invest their savings. But a free market was never meant to be a free license to take whatever you can get, however you can get it. That is what happened too often in the years leading up to the crisis. Some on Wall Street forgot that behind every dollar traded or leveraged, there is family looking to buy a house, pay for an education, open a business, or save for retirement. What happens here has real consequences across our country.

    A comprehensive plan to achieve these reforms has passed the House of Representatives. A Senate version is currently being debated, drawing on the ideas of Democrats and Republicans. Both bills represent significant improvement on the flawed rules we have in place today, despite the furious efforts of industry lobbyists to shape them to their special interests. I am sure that many of those lobbyists work for some of you. But I am here today because I want to urge you to join us, instead of fighting us in this effort. I am here because I believe that these reforms are, in the end, not only in the best interest of our country, but in the best interest of our financial sector. And I am here to explain what reform will look like, and why it matters.

    President Obama will also address the five key proposals he believes must be included in strong financial reform:

    · A system to ensure that the financial system, the broader economy, and the American taxpayers are protected in the event that a large firm begins to fail

    · The Volcker Rule, which sets limits on the size of banks and the risks that banking institutions can take

    · Reforms that will bring new transparency to many financial markets, and bring derivatives and other complicated financial instruments out of the dark

    · Strong consumer financial protections that will give American consumers more protection and power in our financial system, and

    · Say on pay reforms that would give investors and pension holders a stronger role in determining who manages the companies in which they’ve placed their savings.

    ###

  • Inspector general loses legal fight with mayor’s office

    Posted by Todd Lighty at 5 a.m.

    The city’s watchdog agency in charge of uncovering City Hall corruption lost a court fight to force Mayor Richard Daley’s administration to turn over documents relating to the awarding of a no-bid contract.

    The Inspector General’s Office last fall sued Daley’s top lawyer, Mara Georges, and accused her of stymieing an internal investigation into possible wrongdoing by current and former employees.



    After listening to oral arguments Wednesday, a Cook County Circuit Court judge dismissed the lawsuit. The judge found that the inspector general does not have the authority to sue the city’s corporation counsel and that Georges had a valid attorney-client claim for not turning over some records, said Melissa Stratton, a law department spokeswoman.



    Inspector General Joseph Ferguson, who took over the office after the lawsuit was filed last November, said he would not decide whether to appeal until reading the transcript of the judge’s ruling. But he said the decision appears to put the mayor’s office in control of how far an internal investigation can go into the administration.

    Ferguson’s office is investigating whether city employees manipulated the process to award a 2006 no-bid contract to a former city worker.



    Court records state that Georges handed over some documents and refused to release others, citing attorney-client privilege. Records state that Georges withheld some communications among city lawyers, others between lawyers and city workers, and lawyers’ notes and charts related to the investigation.



  • PointChase 1.0 reviewed

    PointChase brings the classic chase the dot game on to your windows phone. The game is quite simple , in fact its too simple but can be fun for a while.

    The game has been released in the Marketplace by l3v5y, yes you would most likely know him as a Mod on xda-developers or an editor on WMPowerUser. If you have been on xda-developers chances are you might have used some of the apps / games by this developer.

    Read the rest of the review at BestWindowsMobileApps here.


  • President Obama official schedule and guidance, April 22, 2010. Wall Street, Earth Day

    THE WHITE HOUSE
    Office of the Press Secretary
    _______________________________________________________________________________________
    FOR IMMEDIATE RELEASE
    April 21, 2010

    DAILY GUIDANCE AND PRESS SCHEDULE FOR
    THURSDAY, APRIL 22, 2010

    In the morning, the President will travel to New York City, where he will deliver remarks at Cooper Union reminding Americans what’s at stake in the push to reform Wall Street and how the bill in the Senate draws on ideas from both sides of the aisle. The President will urge Wall Street to join him in the effort to reform the financial system — not fight it — and to lean on Washington to pass the tough Wall Street reform bill in front of the Senate that protects consumers, ends Too Big to Fail and brings transparency to the derivatives market. This event is pooled for TV and open to pre-credentialed correspondents and still photographers. The deadline to request credentials has passed.

    The President will return to Washington, DC in the afternoon. The arrival on the South Lawn is open press.

    Later, the President will meet with Secretary of the Treasury Tim Geithner in the Oval Office. This meeting is closed press. In the evening, the President will deliver remarks at an Earth Day reception in the Rose Garden. This event is pooled press.

    In-Town Travel Pool
    Wires: AP, Reuters, Bloomberg
    Wire Photos: AP, Reuters, AFP
    TV Corr & Crew: CBS
    Print: Talking Points Memo
    Radio: AP

    Out-of-Town Travel Pool
    Wires: AP, Reuters, Bloomberg
    Wire Photos: AP, Reuters, AFP
    TV Corr & Crew: CBS
    Print: AFP
    Radio: FOX

    EDT

    9:30AM In-Town Travel Pool Call Time

    10:00AM THE PRESIDENT departs The White House en route Andrews Air Force Base
    South Lawn
    Open Press (Pre-set 9:30AM – Final Gather 9:45AM – North Doors of the Palm Room)

    10:15AM THE PRESIDENT departs Andrews Air Force Base en route New York City, New York
    Out-of-Town Travel Pool (Call Time 9:00AM – Virginia Gate, Andrews Air Force Base)

    11:10AM THE PRESIDENT arrives in New York City, New York
    John F. Kennedy International Airport
    Open Press

    11:55AM THE PRESIDENT delivers remarks on Wall Street reform
    Cooper Union
    Pooled TV, Open to pre-credentialed correspondents & still photographers

    1:05PM THE PRESIDENT departs New York City, New York en route Andrews Air Force Base
    John F. Kennedy International Airport
    Open Press

    2:00PM THE PRESIDENT arrives at Andrews Air Force Base
    Out-of-Town Travel Pool

    2:15PM THE PRESIDENT arrives at The White House
    South Lawn
    Open Press (Pre-set 1:45PM – Final Gather 2:00PM – North Doors of the Palm Room)

    3:30PM THE PRESIDENT meets with Secretary of the Treasury Geithner
    Oval Office
    Closed Press

    5:30PM THE PRESIDENT delivers remarks at Earth Day reception
    Rose Garden
    Pooled Press (Pre-set 4:30PM – Final Gather 5:10PM – North Doors of the Palm Room)

    Briefing Schedule

    Press Secretary Robert Gibbs will gaggle aboard Air Force One

    ##

  • William Shatner Lin Yu Chun Duet VIDEO

    In a moment so perfect it could possibly cause the planets to align, super-cute Taiwanese chubster Lin Yu Chun teamed up with William Shatner to sing Bonnie Tyler’s ’80s hit “Total Eclipse Of The Heart” on TBS’ Lopez Tonight Wednesday!

    Asia’s answer to Susan Boyle, Lin gained international stardom as a web viral sensation for his uncanny performance of Whitney Houston’s “I Will Always Love You” on a Taiwanese singing competition earlier this month. In his first appearance on American late night TV, Lin performs his rendition of Whitney’s charttopping ballad of forbidden love, “Saving All My Love For You.”

    How did he do?


  • Is This A Self-Sustaining Recovery? No, And Here’s Why

    (This guest post previously appeared at the author’s blog)

    Richard Koo’s latest commentary is not quite as wildly bullish as equity investors have gotten in recent weeks and I fully agree with his outlook.  The markets are pricing in a self sustaining organic recovery and I still believe we have anything but that.  While we are still very constructive on the economy in H1 (and likely into Q3), I believe we are still mired in a balance sheet recession that is simply being papered over by extraordinary amounts of government spending.  In essence, the government has implemented a massive private sector crediting of accounts while their balance sheets remain highly indebted and continue to be worked down.  Richard Koo agrees.  Mr. Koo notes that the lending market is actually not improving at all:

    “From borrower’s perspective, credit crunch is worsening Amid a severe nationwide credit crunch, the Fed is now actively listening to borrowers and trying to build a close cooperative relationship with the National Federation of Independent Business (NFIB), a leading small business organization. This is a major, unprecedented change. Traditionally, the Fed paid little attention to the views of borrowers, and as a result there were no data series like the index of banks’ willingness to lend as seen by the borrowers found in the Bank of Japan’s Tankan survey. Without input from borrowers, the Fed tended to administer policy based solely on the views of lenders—ie, the financial sector.”

    chart

    “Like the Bank of Japan, the NFIB has been asking borrowers for their views on banks’ willingness to lend for many years. The relevant question asks businesses whether they find it easier or harder to obtain bank loans than they did three months ago. Recent numbers are deep in negative territory, indicating that banks are much more reluctant to lend than they were three months ago. This suggests that the credit crunch is not over and in fact is growing worse.

    Koo elaborates on the deep weakness in the credit markets by claiming that mark to market would result in widespread banking bankruptcies if they were forced to actually mark these assets down to their true values:

    “If US authorities were to require banks to mark their commercial real estate loans to market today, lending to this sector would be extinguished, triggering a chain of bankruptcies as borrowers became unable to roll over their debt.”

    Koo says the weakness in the consumer is best displayed by continuing credit contraction and weak retail trends at Wal-Mart:

    “Wal-Mart sales strategy reflects reduced purchasing power of US consumer Rising retail sales are often cited as evidence of the US recovery. However, outstanding consumer credit in the US contracted another $11.5 billion in February, marking the twelfth decline in 13 months and demonstrating that the household sector is still undertaking balance sheet adjustments. A robust recovery in consumer spending is unlikely as long as credit continues to shrink. Retail leader Wal-Mart announced on 9 April that it would lower the prices on 10,000 of its products in response to a Q1 decline in US store sales, calling into question the oft-heard argument that retail sales are strong. The chain also said it plans to cut more prices in the future. There are two possible causes for the drop in sales at Wal-Mart. One is that incomes have risen, causing consumption to shift from the chain’s inexpensive offerings to higher-end products. The other is that the weak economy has caused a further reduction in consumers’ purchasing power.

    That Wal-Mart is addressing the drop in sales with further price cuts suggests that the company’s executives believe the latter scenario is the more likely. If they attributed the drop in sales to rising incomes, they would instead have announced a shift in their product mix to higher-quality, higher-priced items.”

    What does it all mean?  It means the government must continue to spend or the private sector will fall back into a debt-laden slump.  As we previously mentioned, the private sector is not yet ready to run with the baton and likely won’t be ready to run with it for several years.  If the government cuts back on spending and stops effectively crediting private sector bank accounts the likelihood for a double dip or an all-out new recession increases substantially in 2011 and 2012:

    “Discontinuation of fiscal stimulus could trigger another slump. The impact of the Obama administration’s $787 billion fiscal stimulus, unveiled last February, is now peaking. That reported improvements in economic conditions are still so modest naturally leads to concerns about what will happen when the stimulus winds down. The stimulus is scheduled to have its greatest impact in Q2 and Q3 this year, so I do not expect the economy to lurch backwards in the near future. Nevertheless, the economy could stall again once the stimulus ends unless private demand picks up in the next few months. The economy may rapidly improve in the coming months. However, the fact that the Fed is retraining bank inspectors in an effort to address the credit crunch suggests that central bank officials do not see the recovery as having firm underpinnings.”

    “Economies’ fate depends on whether governments try to reduce deficits.  The recent problems in Greece have helped focus attention in the eurozone on the supposed need for deficit-reduction efforts. This comes at a time when the region’s fiscal stimulus already consists mostly of automatic stabilizers rather than pro-active spending. To cut government spending at this juncture would further reduce the pro-active portion of fiscal outlays and postpone the recovery.”

    In the UK, both the Labour Party and the Conservative Party have laid out deficit-reduction plans ahead of the 6 May elections while the private sector continues to deleverage by paying down debt. The implication in my view is that even if the economies of the US, UK, and the eurozone survive fiscal cutbacks, the eventual recoveries will be modest at best. And if the spending cuts are too severe, the economies are likely to stall once again. Japan and other Asian countries that remain heavily reliant on exports to the US and Europe therefore need to closely monitor political debate on fiscal consolidation in these countries.  US consumer credit continues to contract, and British households and businesses are paying down debt. Those of us in Japan, which unsuccessfully attempted to reduce its budget deficit under similar conditions in 1997 and 2001, are perhaps best positioned to warn people in the US and UK what will happen if the governments of these countries embark on fiscal consolidation efforts.”

    In March of 2009 we began referring to the rally as “the government run rally“.  The rally started on government interventions and continues to this day with a massive and continuing stimulus plan that props up the economy.

    In summary, enjoy the continuing appearance of an economic recovery into the back half of this year (and what will likely be higher equity prices), but don’t get your hopes up for a sustained recovery.  The likelihood of spending cuts and higher taxes will put a damper on the recovery in 2011 just when things are starting to look so good.  And that’s assuming that Ben Bernanke’s cattle prodding of prudent savers into risk assets doesn’t result in extreme malinvestment and destructive asset bubbles before that.

    After 4 seemingly wonderful years wouldn’t it be ironic if President Obama is running for re-election in 2012 and falls on the same Keynesian sword that President Bush and the Republicans fell on in 2008?  All thanks to the creativity of Ben Bernanke and his continuation of the failed Greenspan doctrine.

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  • Hong Kong Threatens To End The Luxury Property Spree For The Second Time In Two Months

    Hong Kong

    Hong Kong’s government has warned that their clamp-down on property speculation isn’t over yet, despite a recent April 1st hike in the tamp duty for property worth over $20 million Hong Kong dollars.

    The Standard:

    The stamp duty on flats valued at up to HK$20 million may be raised if the risk of an asset bubble is boosted by excessive speculation in the property market, Financial Secretary John Tsang warned yesterday.

    Tsang said the government is committed to combating speculative activities, to reduce the risk of a property bubble. More than 13,000 cases of suspected speculation had been identified by the Inland Revenue Department in the fiscal year of 2008-09, with more than 4,000 requiring follow-up action after a review. The authorities will continue to actively track property transactions involving speculation and levy profits tax, he added.

    Hong Kong property stocks slumped today on the news despite the fact that the recent stamp duty increase only applied to higher-end property which comprises just 1.5% of the market.

    Some brokers, perhaps predictably, believe fears are unfounded:

    Bloomberg:

    Hong Kong’s property market will see “no significant implications” from the government’s plans to curtail the risk of a bubble in the sector, Taifook Securities Group Ltd. said in a report.

    “We see no significant implications for them from the new government requirements,” Mak wrote. “Property prices will in the longer-term be dictated by the strength of the economy and the levels of interest rates.”

    The Hang Seng property index fell 1.6% compared to just a 0.3% drop for the Hang Seng.

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  • Secret Service Investigating Kal Penn Robbery

    The Secret Service has joined the investigation into the curbside robbery of actor-turned-politician Kal Penn in Washington this week.

    Penn, real name Kalpen Modi, was mugged on a street in the Nation’s Capital early Monday after a gun-wielding man fled with his wallet and personal belongings. According to police sources, Penn was walking on S. Street in Northwest around 1:20 AM when he was approached by armed suspects.

    Sources say they forced him to the ground, took his money, his wallet, and his government identification.

    TMZ.com spies tattle that the thief also took off with Penn’s two cell phones, one of which was issued by the US government. The Harold & Kumar actor left Hollywood in 2009 to join President Obama’s team as the Associate Director in the White House Office of Public Engagement. Since one of the stolen phones belongs to the government, the Secret Service has joined Washington’s Metropolitan Police Department in the investigation of the robbery.

    White House Communications reportedly stopped service on the stolen phone immediately after Penn informed them of the robbery.

    No arrests have been made.


  • Yow! Check Out What The Euro Just Did

    Euro longs have a serious case of trigger fingers.

    Look what the currency just did on news that Greece’s debt is worse than previously thought.

    From FinViz:

    chart

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