Sen. James M. Inhofe (R-Okla.), Ranking Member of the Senate Committee on Environment and Public Works, sent a letter today to EPW Committee Chairman Barbara Boxer (D-Calif.) requesting hearings on the recent disclosure of emails between some of the world's most preeminent climatologists-emails that reveal apparent attempts to manipulate data, vilify scientists with opposing viewpoints, and circumvent information disclosure laws.
"The emails reveal possible deceitful manipulation of important data and research used by the US Global Change Research Program and the IPCC," Inhofe wrote. "For instance, one scientist wrote of a ‘trick' he employed to ‘hide the decline' in global temperature trends, as well as discussed attempts to ‘redefine what the peer-review literature is' to prevent papers raising questions about anthropogenic global warming from appearing in IPCC reports."
This controversy "could have far-reaching policy implications," Inhofe continued, "affecting everything from (to name a few) cap-and-trade legislation, state and regional climate change programs," and "the Environmental Protection Agency's ‘Proposed Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act'..." These policies "will have enormous economic impacts, not least the EPA's proposed endangerment finding, which, when finalized, will lead to a torrent of new federal regulations that will destroy thousands of jobs and make electricity and gasoline more expensive for consumers and small businesses."
Letter to Senator Boxer
Tuesday, December 1, 2009
A Technical Analyst Sees Hope for the Dollar
By Michael Khan
It seems that no matter what type of analyst is talking, the theme is that everything happening in the world today is supposed to hurt the U.S. dollar.
Rising spending, near-zero interest rates and the need to export our way out of economic malaise all grind the greenback down.
But it is just this type of sentiment that has set the dollar up for a nice little surprise.
Sentiment analysis is the most misunderstood tool in the chartist's toolbox. There is no sentiment ETF that trades and we cannot say that sentiment went up or down by some specific percent each day.
Rather, it is a more abstract concept where we take polls of investors, analysts and newsletter writers. Each one can yield different results, too.
Subjectivity is the name of the game so we must be both flexible and creative. For example, just reading the news media tells us that the prevailing mood surrounding the dollar is negative. Indeed, we can make the leap that the mood is so skewed towards the bearish side that contrarians start to notice. If everyone is bearish, who is left to sell?
Jake Bernstein, proprietor of Trade-Futures.com and a 40-year veteran of futures trading, reports that his Daily Sentiment Index (DSI) is at an extreme low of 14% bulls, as of Nov. 20. That means an overwhelming majority traders polled think the dollar is going lower. And typically, that precedes a low in the market.
Read the rest of the article here.
Michael Kahn writes the Getting Technical column for Barron's Online, which analyzes sectors and markets twice a week. http://www.barrons.com/ . Read his blog at www.QuickTakesPro.com/blog .
It seems that no matter what type of analyst is talking, the theme is that everything happening in the world today is supposed to hurt the U.S. dollar.
Rising spending, near-zero interest rates and the need to export our way out of economic malaise all grind the greenback down.
But it is just this type of sentiment that has set the dollar up for a nice little surprise.
Sentiment analysis is the most misunderstood tool in the chartist's toolbox. There is no sentiment ETF that trades and we cannot say that sentiment went up or down by some specific percent each day.
Rather, it is a more abstract concept where we take polls of investors, analysts and newsletter writers. Each one can yield different results, too.
Subjectivity is the name of the game so we must be both flexible and creative. For example, just reading the news media tells us that the prevailing mood surrounding the dollar is negative. Indeed, we can make the leap that the mood is so skewed towards the bearish side that contrarians start to notice. If everyone is bearish, who is left to sell?
Jake Bernstein, proprietor of Trade-Futures.com and a 40-year veteran of futures trading, reports that his Daily Sentiment Index (DSI) is at an extreme low of 14% bulls, as of Nov. 20. That means an overwhelming majority traders polled think the dollar is going lower. And typically, that precedes a low in the market.
Read the rest of the article here.
Michael Kahn writes the Getting Technical column for Barron's Online, which analyzes sectors and markets twice a week. http://www.barrons.com/ . Read his blog at www.QuickTakesPro.com/blog .
Tyler Cowen Rips "Ron Paul-Lew Rockwell Libertarianism"
George Mason University economics professor, economics blogger at Marginal Revolution and "Economic Scene" columnist for NYT, Tyler Cowen, ripped into what he called "Ron Paul-Lew Rockwell Libertarianism," today in Washington D.C.
The venue for the attack was a Cato Institute book forum that featured Tom Palmer's new book Realizing Freedom: Libertarian Theory, History, and Practice.
Cowen served as commenter on Palmer's book.
Following Palmer's comments, which I only caught the tail end of because of my late arrival, Cowen began his comments, and almost immediately differentiated between what he called "Ron Paul-Lew Rockwell libertarianism" and "realistic" libertarianism. He said that like Palmer, he fell into the "realistic" camp.
During the Q&A, I asked Cowen to amplify on the differences between what he deemed "Ron Paul-Lew Rockwell libertarianism" and "realistic" libertarianism. He pointed to a view on immigration and "too much" conspiracy theory that he claimed the "Ron Paul-Lew Rockwell libertarians" held. He said they were moving toward the extreme right wing Republican camp. He contrasted this with what he called realistic-secular libertarianism. He said he expected that a full split between the two camps will occur.
He then stated that he knew some of the Ron Paul-Lew Rockwell camp have been attacking Tom Palmer for sometime and that he did not understand that.
After the forum concluded, I was able to catch-up to Cowen.
I asked him if he thought there was such a thing as Austrian business cycle theory. He said yes but that there has been no original thinking done in the field since the 1930's.
I asked him if he agreed with Tom Palmer's view that ABCT was a religion. He said yes. I asked him how so, and he reverted back to saying that there wasn't any new thinking in the field, that there weren't any masters in the subject.
I asked if it could be said about most theories that most were followers and that there were few masters. "Even in Keynesianism," I continued. He agreed. I then asked if he, thus, was making a distinction without a difference.
I asked him how he thought ABCT needed updating. He said people had changed and that they now understood to be aware of inflation. That they wouldn't just buy up things in the face of inflation. I asked him if the housing bubble didn't contradict his point. He said that the housing bubble could only be one-third attributed to inflation.
I asked him who he thought was writing economic "religion". He wimped out and told me he couldn't think of any names. He told me that he knew he had read some stuff on it but he couldn't remember the names.
I asked him if he thought anyone at the Mises Institute was writing economic religion. He said some, but again he couldn't remember any names.
I asked him if anyone at Mises was not practicing economic religion. He said Roger Garrison. And then he added, "I haven't spoken to Garrison in a long time, so I'm not completely sure, but I hope he isn't. "
He then told me I could google, Austrian theory and financial crisis, and half the results would be "religious Austrians."
As for Palmer, I had hoped to catch up with him and ask him a few follow up questions, unfortunately he was busy autographing books.
Palmer actually made a couple of interesting points during his comments. He said that some of the most original economic thinking, today, was being written in Chinese. He named some Chinese writers. He also pointed out that many European countries had built up strong nation states because leaders were able to justify the necessity by using the fear of attack from neighboring countries. He further stated that in the past the United States was exempt from this type fear mongering because of the separation by two oceans and also the tranquil neighbors of Canada and the present Mexico. He continued by stating that in the present climate following 9-11, the oceans have shrunk and the nationalistic trend has picked up in the U.S. over the last 9 years. He also predicted a merging of the left wing and extreme right wing nationalism. He pointed out that if ObamaCare passes, the left wing will get what they want. (He noted that the "public option" is socialism, and it was as if different combinations of words were tested to find the one that sounded the least like socialism even though it was.) He predicted that ObamaCare will result in deficits within two years, at which point the right wing will start blaming the deficits on illegal Mexicans, and then the right wing will demand a national ID card.
Palmer also at one point during his opening remarks suggested that libertarians should be tolerant of those who have views different from their own, and find what is correct thinking in those that have different views.
This comment struck me in particular, since he doesn't seem to be very tolerant of those who espouse Austrian business cycle theory, although they appear to agree on many subjects. I found it kind of odd that he wants to make nice with commies, but is about as tolerant of the Austrians as most would be about a mosquito about to sting.
I don't know what the history is between the Palmer camp and the anti-Palmer camp, and I like to see a good rumble as much as the next guy, maybe even more so than the next guy, but you have to have the facts when you rumble. And, when Palmer is throwing around accusations that a theory is religion it is a weak punch, especially when Hayek was awarded the Nobel Prize for the theory, and, most important, it is a logical theory based on strong premises. His claim also shows he does not practice what he preaches, since he is throwing hand grenades in the tent next to him.
That said, Palmer appears to be a bright guy. Based on his absurd charges that ABCT is a religion, I would have never gone out of my way to read anything else Palmer wrote. It struck me as very mediocre writing. From what I caught of his comments today at Cato, I am now intrigued enough to read his new book. Just how can a guy make such absurd statements and at the same time sound intelligent on other topics? Maybe the book will provide a clue.
As for Cowen, he's a bright guy, but I don't get how people fawn over his intelligence. At best, he is a sloppy phraser of his terms. Ron Paul and Lew Rockwell merging with the extreme Republican right? This would be the pro-government, pro-war right? Paul-Rockwell stand against 80% of what the pro-war, pro-corporatist big government Republican right stands for. Maybe Cowen is more Machiavellian than I give him credit for and he knows exactly what he is doing by attempting to paint Paul-Rockwell in a corner that they clearly don't belong.
It's the same with the discussion on ABCT, I was trying to get as much as I could out of Cowen, so I didn't challenge him on every point, but much of what he said to me about ABCT indicated he didn't understand it, or he was, again, being Machevelian in building a straw theory.
Which really alarms me in a way, because he told me that some of his students at George Mason University had Austrian "religion". Which to you kids I say, if his comments to you are the same as they were to me, your prof either doesn't understand ABCT or he does and is building a strawman for other purposes. Study on your own, read everybody's views, and go with what is most logical.
All this said, Cowen did tell me his next book is on the decidedly non-Machiavellian topic: The Economics of Food. He tells me that the book will explain how to find good eating places around the world. I'm thinking he can't possibly have an agenda with this book other than to make a few $$$, so this book may really show us what kind of economist Cowen really is and how creative he can be.
It's obviously the kind of stuff he shoud be writing.
The venue for the attack was a Cato Institute book forum that featured Tom Palmer's new book Realizing Freedom: Libertarian Theory, History, and Practice.
Cowen served as commenter on Palmer's book.
Following Palmer's comments, which I only caught the tail end of because of my late arrival, Cowen began his comments, and almost immediately differentiated between what he called "Ron Paul-Lew Rockwell libertarianism" and "realistic" libertarianism. He said that like Palmer, he fell into the "realistic" camp.
During the Q&A, I asked Cowen to amplify on the differences between what he deemed "Ron Paul-Lew Rockwell libertarianism" and "realistic" libertarianism. He pointed to a view on immigration and "too much" conspiracy theory that he claimed the "Ron Paul-Lew Rockwell libertarians" held. He said they were moving toward the extreme right wing Republican camp. He contrasted this with what he called realistic-secular libertarianism. He said he expected that a full split between the two camps will occur.
He then stated that he knew some of the Ron Paul-Lew Rockwell camp have been attacking Tom Palmer for sometime and that he did not understand that.
After the forum concluded, I was able to catch-up to Cowen.
I asked him if he thought there was such a thing as Austrian business cycle theory. He said yes but that there has been no original thinking done in the field since the 1930's.
I asked him if he agreed with Tom Palmer's view that ABCT was a religion. He said yes. I asked him how so, and he reverted back to saying that there wasn't any new thinking in the field, that there weren't any masters in the subject.
I asked if it could be said about most theories that most were followers and that there were few masters. "Even in Keynesianism," I continued. He agreed. I then asked if he, thus, was making a distinction without a difference.
I asked him how he thought ABCT needed updating. He said people had changed and that they now understood to be aware of inflation. That they wouldn't just buy up things in the face of inflation. I asked him if the housing bubble didn't contradict his point. He said that the housing bubble could only be one-third attributed to inflation.
I asked him who he thought was writing economic "religion". He wimped out and told me he couldn't think of any names. He told me that he knew he had read some stuff on it but he couldn't remember the names.
I asked him if he thought anyone at the Mises Institute was writing economic religion. He said some, but again he couldn't remember any names.
I asked him if anyone at Mises was not practicing economic religion. He said Roger Garrison. And then he added, "I haven't spoken to Garrison in a long time, so I'm not completely sure, but I hope he isn't. "
He then told me I could google, Austrian theory and financial crisis, and half the results would be "religious Austrians."
As for Palmer, I had hoped to catch up with him and ask him a few follow up questions, unfortunately he was busy autographing books.
Palmer actually made a couple of interesting points during his comments. He said that some of the most original economic thinking, today, was being written in Chinese. He named some Chinese writers. He also pointed out that many European countries had built up strong nation states because leaders were able to justify the necessity by using the fear of attack from neighboring countries. He further stated that in the past the United States was exempt from this type fear mongering because of the separation by two oceans and also the tranquil neighbors of Canada and the present Mexico. He continued by stating that in the present climate following 9-11, the oceans have shrunk and the nationalistic trend has picked up in the U.S. over the last 9 years. He also predicted a merging of the left wing and extreme right wing nationalism. He pointed out that if ObamaCare passes, the left wing will get what they want. (He noted that the "public option" is socialism, and it was as if different combinations of words were tested to find the one that sounded the least like socialism even though it was.) He predicted that ObamaCare will result in deficits within two years, at which point the right wing will start blaming the deficits on illegal Mexicans, and then the right wing will demand a national ID card.
Palmer also at one point during his opening remarks suggested that libertarians should be tolerant of those who have views different from their own, and find what is correct thinking in those that have different views.
This comment struck me in particular, since he doesn't seem to be very tolerant of those who espouse Austrian business cycle theory, although they appear to agree on many subjects. I found it kind of odd that he wants to make nice with commies, but is about as tolerant of the Austrians as most would be about a mosquito about to sting.
I don't know what the history is between the Palmer camp and the anti-Palmer camp, and I like to see a good rumble as much as the next guy, maybe even more so than the next guy, but you have to have the facts when you rumble. And, when Palmer is throwing around accusations that a theory is religion it is a weak punch, especially when Hayek was awarded the Nobel Prize for the theory, and, most important, it is a logical theory based on strong premises. His claim also shows he does not practice what he preaches, since he is throwing hand grenades in the tent next to him.
That said, Palmer appears to be a bright guy. Based on his absurd charges that ABCT is a religion, I would have never gone out of my way to read anything else Palmer wrote. It struck me as very mediocre writing. From what I caught of his comments today at Cato, I am now intrigued enough to read his new book. Just how can a guy make such absurd statements and at the same time sound intelligent on other topics? Maybe the book will provide a clue.
As for Cowen, he's a bright guy, but I don't get how people fawn over his intelligence. At best, he is a sloppy phraser of his terms. Ron Paul and Lew Rockwell merging with the extreme Republican right? This would be the pro-government, pro-war right? Paul-Rockwell stand against 80% of what the pro-war, pro-corporatist big government Republican right stands for. Maybe Cowen is more Machiavellian than I give him credit for and he knows exactly what he is doing by attempting to paint Paul-Rockwell in a corner that they clearly don't belong.
It's the same with the discussion on ABCT, I was trying to get as much as I could out of Cowen, so I didn't challenge him on every point, but much of what he said to me about ABCT indicated he didn't understand it, or he was, again, being Machevelian in building a straw theory.
Which really alarms me in a way, because he told me that some of his students at George Mason University had Austrian "religion". Which to you kids I say, if his comments to you are the same as they were to me, your prof either doesn't understand ABCT or he does and is building a strawman for other purposes. Study on your own, read everybody's views, and go with what is most logical.
All this said, Cowen did tell me his next book is on the decidedly non-Machiavellian topic: The Economics of Food. He tells me that the book will explain how to find good eating places around the world. I'm thinking he can't possibly have an agenda with this book other than to make a few $$$, so this book may really show us what kind of economist Cowen really is and how creative he can be.
It's obviously the kind of stuff he shoud be writing.
Heavy Day of Plotting for Geithner
This morning, Treasury Secretary Geithner will meet with House Financial Services Committee Chairman Barney Frank to discuss financial reform legislation. Included on the agenda is probably discussion of the strategy to stop the Ron Paul amendment.
Infrastructure investors, the Carlyle Group, will be happy to hear that Secretary Geithner will meet with Pennsylvania Governor Rendell, co-chair of Building America’s Future, in the afternoon. According to the Treasury, they will discuss transportation and infrastructure.
Infrastructure investors, the Carlyle Group, will be happy to hear that Secretary Geithner will meet with Pennsylvania Governor Rendell, co-chair of Building America’s Future, in the afternoon. According to the Treasury, they will discuss transportation and infrastructure.
Treasury Selling Bank Warants While the Selling is Good
The Treasury today announced that it has commenced a secondary public offering of approximately 12,657,960 warrants to purchase the common stock of Capital One Financial Corporation. The offering is expected to price through a modified Dutch auction. Deutsche Bank Securities Inc. is the sole book-running manager and Siebert Capital Markets is the co-manager for the offering.
By selling now, the Treasury will be able to claim a profit has been made by "the taxpayer". (Don't expect a check from the Treasury for your share of the profits anytime soon) And. no mention will be made of the fact that the money to boost banks stocks was printed out of thin air at double digit rates by Ben Bernanke, between September 2008 and February 2009.
By selling now, the Treasury will be able to claim a profit has been made by "the taxpayer". (Don't expect a check from the Treasury for your share of the profits anytime soon) And. no mention will be made of the fact that the money to boost banks stocks was printed out of thin air at double digit rates by Ben Bernanke, between September 2008 and February 2009.
Top Ten for the Month of November
Here are the Top Ten most viewed EPJ posts for the month of November, 2009:
#1 HOT: Dubai Halts Payments on Dubai World Debt
#2 Who Knew?
#3 Shock: Inside the Healthcare Bill
#4 HSBC to Retail Gold Buyers: "Get Your Gold the Hell Out of Here"
#5 What's the Fed Hiding?
#6 Fed to Banks With Major Commercial Real Estate Loan Exposure: Bang You Are Dead
#7 Why Tom Woods Set Off Mel Watt's Voltage
#8 U.A.E. Removes Sunday London Times From Newsstands
#9 Fed Trying to Hide Smoking Gun
#10 How Nicolas Cage Spent His Way To The Poorhouse
#1 HOT: Dubai Halts Payments on Dubai World Debt
#2 Who Knew?
#3 Shock: Inside the Healthcare Bill
#4 HSBC to Retail Gold Buyers: "Get Your Gold the Hell Out of Here"
#5 What's the Fed Hiding?
#6 Fed to Banks With Major Commercial Real Estate Loan Exposure: Bang You Are Dead
#7 Why Tom Woods Set Off Mel Watt's Voltage
#8 U.A.E. Removes Sunday London Times From Newsstands
#9 Fed Trying to Hide Smoking Gun
#10 How Nicolas Cage Spent His Way To The Poorhouse
Chelsea Clinton: A Future Death Panel Czar?
On news that Chelsea Clinton, the 29-year-old daughter of former President Bill Clinton and Secretary of State Hillary Rodham Clinton, is engaged to her longtime boyfriend, Marc Mezvinsky, NYT reports that Chelsea has left her job at McKinsey & Company, the consulting firm, and returned to school after last year’s presidential campaign to study public health at Columbia University.
Hmm, public health.
NYT also reports that Mezvinsky has left his position at Goldman Sachs and is now at 3G Capital Management.
NYT goes on to report on Mezvinsky's parents:
Hmm, public health.
NYT also reports that Mezvinsky has left his position at Goldman Sachs and is now at 3G Capital Management.
NYT goes on to report on Mezvinsky's parents:
Mr. Mezvinsky, 31...is the son of two former Democratic members of Congress. His father, Edward Mezvinsky of Iowa, served from 1973 to 1977 but was later convicted of defrauding investors and sentenced to nearly seven years in prison; he was released last year. His mother, Marjorie Margolies-Mezvinsky of Pennsylvania, served from 1993 to 1995, losing re-election after voting for President Clinton’s budget program.
As a Result of AIG, Is The Fed on the Hook to Bailout the World?
Sometimes you learn the damnedest things by reading footnotes. Marla Singer and Geoffrey Batt over at ZeroHedge have been reading the Office of the Special Inspector General for the Troubled Asset Relief Program's (SIGTARP's) November 17, 2009 report "Factors Affecting Efforts to Limit Payments to AIG Counterparties" (Pdf).
They found some pretty interesting footnotes that might prompt a question or two for Ben Bernanke at his Senate reconfirmation hearing, scheduled for Thursday.
This is how Singer and Batt lead off:
They found some pretty interesting footnotes that might prompt a question or two for Ben Bernanke at his Senate reconfirmation hearing, scheduled for Thursday.
This is how Singer and Batt lead off:
Buried in the depths of page 26 of the Office of the Special Inspector General for the Troubled Asset Relief Program's (SIGTARP's) November 17, 2009 report "Factors Affecting Efforts to Limit Payments to AIG Counterparties" hidden in footnotes 33 and 34 is something of a mystery. It might be the beginning of an interconnected financial chain involving Dubai, the Federal Reserve, AIG, Basel I, Eastern Europe and even Switzerland and which, even if it doesn't worry you, probably should. Or it might be nothing at all.They conclude with a number of questions:
You can read the full Singer-Batt analysis, including the smoking footnotes, here....AIG is still on the hook- and hadn't planned to be.
This raises a number of questions:
If the European banks that bought swap protection from AIG are still relying on this protection to meet their capital requirements, and AIG might be unable to make good on the agreements, are these banks actually out of Basel I compliance as we type this?
Are the banks still able to use swap protection to reduce their collateral requirements because of the implicit or explicit backing of AIG by the Federal Reserve?
If this situation existed in September-November 2008, as it certainly appears to have, how exactly can the Federal Reserve claim in good faith that it lacked the leverage to negotiate with these banks from a position of strength? (One assumes that many of the same names collecting payment from AIG were also AIG swap protection buyers of the sort mentioned in the SIGTARP report). Failure to back up an insolvent AIG would have resulted in near-immediate Basel I non-compliance as the protection offered by these swaps, and on which these banks depended for their reduced capital requirements, evaporated- a near death sentence.
Or had these banks somehow, and in the middle of the credit crisis, managed to boost their capital to levels that made the swaps unimportant?
If so, why keep them on the books now, instead of unwinding them?
Since it doesn't seem likely that a teetering AIG could make good on these agreements without substantial assistance is the Fed is currently the ultimate backstop for AIG?
Does this mean that the Fed is effectively underwriting these swap agreements?
Will the Fed post collateral if deteriorating credit conditions at AIG (today's -$11 billion news suddenly seems especially daunting if the potential insurance shortfall has an effect on credit ratings) or general credit market issues require it? Or are we missing something significant? By September 30, 2008 AIG had already posted $974 million in collateral for its "Foreign Regulatory Capital" portfolio.What if European banks are hit with more losses from, oh, we don't know, say... Dubai? Deleveraging, risk reduction and credit tightening would have an effect on LIBOR, the Eurobond market and, of course, Eastern Europe. Might not that sort of contagion easily spread to, say, Switzerland, which enjoyed the other side of the carry trade for years by lending Swiss Franc like mad to any Eastern European mortgage borrower who could sign documents?
Could it be that the Fed, once again, might have to bail out the world?
Or maybe we are just missing something obvious
Release Date Set for Wall Street 2
According to Jane Boursaw at Film Gekko, Wall Street 2: Money Never Sleeps is scheduled for an April 23, 2010 release date.
(Photo: Donald Trump with director Oilver Stone on the set.)
Major North Korea Currency Devaluation
North Korea has devalued its currency by 100 to 1, Kim Sue-young at the Korea Times is reporting.
Sue-young writes:
Take notes. This could be the U.S. years down the road. First will come exchange controls and the end to fluctuating exchange rates, and then the devaluations will come.
UPDATE: WSJ reports that the devaluation has triggered chaos, according to news outlets in South Korea that specialize in obtaining information from the North, as people rushed to banks and offices of the ruling Workers Party to get information, make exchanges or trade existing North Korean won for euros and U.S. dollars.
Sue-young writes:
A North Korea watcher said Tuesday that Pyongyang's reported revaluation of its currency was aimed at increasing the wealth of the nation and beefing up state-run companies.According to reports, the secretive state suddenly removed two zeros from the nominal value of banknotes Monday to curb inflation and black marketeering. The adjustment was the first in 17 years...This truly is an old trick to screw those holding large sums of cash. Now they will have to turn it in at the new rate to get the new bills, which, of course, will buy a hundred times less of foreign currency at official NK currency exchange counters.
``An individual is reportedly allowed to exchange up to 100,000 won (about $86) for the new banknotes,'' said Park Hyeong-jung, a senior research fellow at the Korea Institute for National Unification (KINU). The measure negatively affects the middle class who possess the North Korean currency and only benefits those who have foreign currency, he told The Korea Times...
A North Korean foreign trading official based in China reportedly said the reclusive state set the exchange rate as 100 to 1 and accordingly, the old denomination of 1,000 won is replaced by the new 10 won. According to North Korea's fixed exchange rate before the revaluation, a U.S. dollar was equivalent to 135 North Korean won.
``Black markets in Pyongyang have turned chaotic as people rushed to convert the local currency into Chinese yuan or the U.S. dollar,'' the official was quoted as saying by Yonhap News. The new bill will likely be put into circulation from this Sunday, according to a report.
Take notes. This could be the U.S. years down the road. First will come exchange controls and the end to fluctuating exchange rates, and then the devaluations will come.
UPDATE: WSJ reports that the devaluation has triggered chaos, according to news outlets in South Korea that specialize in obtaining information from the North, as people rushed to banks and offices of the ruling Workers Party to get information, make exchanges or trade existing North Korean won for euros and U.S. dollars.
BOJ Makes Unscheduled Decision on Quantitative Easing Steps
It's unclear why the Bank of Japan moved now, but in a surprise move, just a day before BOJ monetary policy makers are scheduled to meet, the bank has announced that it is taking additional quantitative easing steps.
The central bank unanimously voted to keep its overnight call-rate target at 0.1% but also set up a new 10 trillion yen ($120 billion) lending facility, which will accept as collateral Japanese government bonds, corporate bonds, commercial paper, and deeds on loans.
"While Japan's economy is picking up, there is not yet sufficient momentum to support self-sustaining recovery in business, fixed investment and private consumption," the BoJ said in its statement, adding that the recovery will likely "remain moderate" through late 2010.
Bank of Japan Gov. Masaaki Shirakawa said at a news conference Tuesday after the decision that the new lending facility is aimed at making loans available at "virtually zero interest rates," and could be called "quantitative easing in a broad sense," according to Dow Jones Newswires.
The central bank unanimously voted to keep its overnight call-rate target at 0.1% but also set up a new 10 trillion yen ($120 billion) lending facility, which will accept as collateral Japanese government bonds, corporate bonds, commercial paper, and deeds on loans.
"While Japan's economy is picking up, there is not yet sufficient momentum to support self-sustaining recovery in business, fixed investment and private consumption," the BoJ said in its statement, adding that the recovery will likely "remain moderate" through late 2010.
Bank of Japan Gov. Masaaki Shirakawa said at a news conference Tuesday after the decision that the new lending facility is aimed at making loans available at "virtually zero interest rates," and could be called "quantitative easing in a broad sense," according to Dow Jones Newswires.
Climategate: Follow the Money
Bret Stephens at WSJ details the money that flowed to those who supported the belief in climate change:
Consider the case of Phil Jones, the director of the CRU and the man at the heart of climategate. According to one of the documents hacked from his center, between 2000 and 2006 Mr. Jones was the recipient (or co-recipient) of some $19 million worth of research grants, a sixfold increase over what he'd been awarded in the 1990s.
Why did the money pour in so quickly? Because the climate alarm kept ringing so loudly: The louder the alarm, the greater the sums. And who better to ring it than people like Mr. Jones, one of its likeliest beneficiaries?
Thus, the European Commission's most recent appropriation for climate research comes to nearly $3 billion, and that's not counting funds from the EU's member governments. In the U.S., the House intends to spend $1.3 billion on NASA's climate efforts, $400 million on NOAA's, and another $300 million for the National Science Foundation. The states also have a piece of the action, with California—apparently not feeling bankrupt enough—devoting $600 million to their own climate initiative. In Australia, alarmists have their own Department of Climate Change at their funding disposal.
And all this is only a fraction of the $94 billion that HSBC Bank estimates has been spent globally this year on what it calls "green stimulus"—largely ethanol and other alternative energy schemes—of the kind from which Al Gore and his partners at Kleiner Perkins hope to profit handsomely.
Supply, as we know, creates its own demand. So for every additional billion in government-funded grants (or the tens of millions supplied by foundations like the Pew Charitable Trusts), universities, research institutes, advocacy groups and their various spin-offs and dependents have emerged from the woodwork to receive them.
Today these groups form a kind of ecosystem of their own. They include not just old standbys like the Sierra Club or Greenpeace, but also Ozone Action, Clean Air Cool Planet, Americans for Equitable Climate Change Solutions, the Alternative Energy Resources Association, the California Climate Action Registry and so on and on. All of them have been on the receiving end of climate change-related funding, so all of them must believe in the reality (and catastrophic imminence) of global warming just as a priest must believe in the existence of God.
None of these outfits are per se corrupt, in the sense that the monies they get are spent on something other than their intended purposes. But they depend on an inherently corrupting premise, namely that the hypothesis on which their livelihood depends has in fact been proved. Absent that proof, everything they represent—including the thousands of jobs they provide—vanishes. This is what's known as a vested interest, and vested interests are an enemy of sound science.
Which brings us back to the climategate scientists, the keepers of the keys to the global warming cathedral. In one of the more telling disclosures from last week, a computer programmer writes of the CRU's temperature database: "I am very sorry to report that the rest of the databases seems to be in nearly as poor a state as Australia was. . . . Aarrggghhh! There truly is no end in sight. . . . We can have a proper result, but only by including a load of garbage!"
Consider the case of Phil Jones, the director of the CRU and the man at the heart of climategate. According to one of the documents hacked from his center, between 2000 and 2006 Mr. Jones was the recipient (or co-recipient) of some $19 million worth of research grants, a sixfold increase over what he'd been awarded in the 1990s.
Why did the money pour in so quickly? Because the climate alarm kept ringing so loudly: The louder the alarm, the greater the sums. And who better to ring it than people like Mr. Jones, one of its likeliest beneficiaries?
Thus, the European Commission's most recent appropriation for climate research comes to nearly $3 billion, and that's not counting funds from the EU's member governments. In the U.S., the House intends to spend $1.3 billion on NASA's climate efforts, $400 million on NOAA's, and another $300 million for the National Science Foundation. The states also have a piece of the action, with California—apparently not feeling bankrupt enough—devoting $600 million to their own climate initiative. In Australia, alarmists have their own Department of Climate Change at their funding disposal.
And all this is only a fraction of the $94 billion that HSBC Bank estimates has been spent globally this year on what it calls "green stimulus"—largely ethanol and other alternative energy schemes—of the kind from which Al Gore and his partners at Kleiner Perkins hope to profit handsomely.
Supply, as we know, creates its own demand. So for every additional billion in government-funded grants (or the tens of millions supplied by foundations like the Pew Charitable Trusts), universities, research institutes, advocacy groups and their various spin-offs and dependents have emerged from the woodwork to receive them.
Today these groups form a kind of ecosystem of their own. They include not just old standbys like the Sierra Club or Greenpeace, but also Ozone Action, Clean Air Cool Planet, Americans for Equitable Climate Change Solutions, the Alternative Energy Resources Association, the California Climate Action Registry and so on and on. All of them have been on the receiving end of climate change-related funding, so all of them must believe in the reality (and catastrophic imminence) of global warming just as a priest must believe in the existence of God.
None of these outfits are per se corrupt, in the sense that the monies they get are spent on something other than their intended purposes. But they depend on an inherently corrupting premise, namely that the hypothesis on which their livelihood depends has in fact been proved. Absent that proof, everything they represent—including the thousands of jobs they provide—vanishes. This is what's known as a vested interest, and vested interests are an enemy of sound science.
Which brings us back to the climategate scientists, the keepers of the keys to the global warming cathedral. In one of the more telling disclosures from last week, a computer programmer writes of the CRU's temperature database: "I am very sorry to report that the rest of the databases seems to be in nearly as poor a state as Australia was. . . . Aarrggghhh! There truly is no end in sight. . . . We can have a proper result, but only by including a load of garbage!"
Caracas Shuts Banks, Sealing Insider's Fall
Venezuela said Monday it will liquidate two banks owned by businessman Ricardo Fernandez and temporarily shut two others, intensifying a showdown between President Hugo Chávez and a billionaire long considered a close ally, according to WSJ.
Fernandez, who made an estimated $1.6 billion largely through government contracts, was seen by many Venezuelans as the epitome of the crony capitalism that has flourished under Chávez.
Fernandez, 44, turned himself in to Venezuela's secret police on Nov. 20, hours after the government took over the management of four failing banks that he and a group of investors had bought over the course of the past year. He faces up to 10 years in prison on charges of illegally using depositors' money, self lending and criminal association.
It is unclear why the government moved against him, most likely, though, a battle over the spoils.
Fernandez, who made an estimated $1.6 billion largely through government contracts, was seen by many Venezuelans as the epitome of the crony capitalism that has flourished under Chávez.
Fernandez, 44, turned himself in to Venezuela's secret police on Nov. 20, hours after the government took over the management of four failing banks that he and a group of investors had bought over the course of the past year. He faces up to 10 years in prison on charges of illegally using depositors' money, self lending and criminal association.
It is unclear why the government moved against him, most likely, though, a battle over the spoils.
It's Down to Linda McMahon, Rob Simmons and Peter Schiff
It appears Tom Foley is considering a switch to the governor's race.
Former World Wrestling prez Linda McMahon, however, continues with her own form of money bomb.
McMahon campaign insiders tell Rick Green that McMahon will carpet bomb TV viewers with an ad buy "well in excess" of half a million bucks that will run though Dec. 20.
Former World Wrestling prez Linda McMahon, however, continues with her own form of money bomb.
McMahon campaign insiders tell Rick Green that McMahon will carpet bomb TV viewers with an ad buy "well in excess" of half a million bucks that will run though Dec. 20.
Mortgage Modification: Just Another Way to Slip Billions to Banks
By Dean Baker
The big talk in Washington these days is "helping homeowners". Unfortunately, what passes for help to homeowners in the capitol might look more like handing out money to banks anywhere else.
The basic story is fairly simple. Tens of millions of US homeowners are now underwater: they owe more on their mortgage than the market value of their home. The reason is that they bought homes at bubble-inflated prices earlier in the decade. Economists and other policy wonks insisted that housing was a great buy, even as house prices got ever more out-of-line with economic fundamentals.
Needless to say, the Wall Street crew was eager to cash in on the mania, peddling deceptive mortgages and reselling mortgage-backed securities all over the world. These deceptive mortgages have now "reset" to higher interest rates, leaving many people unable to afford their mortgage payments. However, even at lower interest rates, homeowners who purchased houses at bubble-inflated prices would find themselves paying far more for their homes than they would to rent a comparable house.
As a result, these homeowners are effectively throwing money away every time they make their monthly mortgage repayment. They would be much better off renting the same house and putting the savings in a retirement account or some other form of investment.
The gaps between mortgage payments and rent can often be quite large. A study that we put out at the Center for Economic and Policy Research calculated a family that purchased a small home in Los Angeles near the peak of the bubble could save $1,640 a month by renting rather than owning. This comes to almost $20,000 a year. In Phoenix a family who purchased a home near the peak of the bubble could save $420 a month or $5,000 a year. In Miami the savings would be $1,940 a month, more than $23,000 a year.
These homeowners also have no reasonable prospect of ever getting equity in their homes. In many cases they are 20% or 30% underwater, possibly owing $100,000 more than the current value of their house. Many of the people who never saw the housing bubble are arguing that house prices will return to their bubble peaks. No doubt, these people also expect a resurgence of the internet stocks of the late 1990s.
In reality, there continues to be an enormous over-supply of housing as reflected by the record vacancy rate. This huge over-supply is causing nominal rents to actually decline for the first time ever. Once the homebuyers' tax credit and other extraordinary subsidies end, house prices will resume falling to bring supply and demand into balance.
In this context, it is extremely unlikely that the vast majority of underwater homeowners will ever accumulate a penny in equity. Keeping them in their homes as owners means wasting thousands of dollars a year on excess housing costs only to be forced to arrange a short sale or face a foreclosure at some future point in time.
So, who benefits from "helping homeowners" in this story? Naturally the big beneficiaries are the banks. If the government pays for a mortgage modification where the homeowner is still paying more for the mortgage than they would for rent, then the bank gets a big gift from the government, but the homeowner is still coming out behind.
Read the full article here.
The big talk in Washington these days is "helping homeowners". Unfortunately, what passes for help to homeowners in the capitol might look more like handing out money to banks anywhere else.
The basic story is fairly simple. Tens of millions of US homeowners are now underwater: they owe more on their mortgage than the market value of their home. The reason is that they bought homes at bubble-inflated prices earlier in the decade. Economists and other policy wonks insisted that housing was a great buy, even as house prices got ever more out-of-line with economic fundamentals.
Needless to say, the Wall Street crew was eager to cash in on the mania, peddling deceptive mortgages and reselling mortgage-backed securities all over the world. These deceptive mortgages have now "reset" to higher interest rates, leaving many people unable to afford their mortgage payments. However, even at lower interest rates, homeowners who purchased houses at bubble-inflated prices would find themselves paying far more for their homes than they would to rent a comparable house.
As a result, these homeowners are effectively throwing money away every time they make their monthly mortgage repayment. They would be much better off renting the same house and putting the savings in a retirement account or some other form of investment.
The gaps between mortgage payments and rent can often be quite large. A study that we put out at the Center for Economic and Policy Research calculated a family that purchased a small home in Los Angeles near the peak of the bubble could save $1,640 a month by renting rather than owning. This comes to almost $20,000 a year. In Phoenix a family who purchased a home near the peak of the bubble could save $420 a month or $5,000 a year. In Miami the savings would be $1,940 a month, more than $23,000 a year.
These homeowners also have no reasonable prospect of ever getting equity in their homes. In many cases they are 20% or 30% underwater, possibly owing $100,000 more than the current value of their house. Many of the people who never saw the housing bubble are arguing that house prices will return to their bubble peaks. No doubt, these people also expect a resurgence of the internet stocks of the late 1990s.
In reality, there continues to be an enormous over-supply of housing as reflected by the record vacancy rate. This huge over-supply is causing nominal rents to actually decline for the first time ever. Once the homebuyers' tax credit and other extraordinary subsidies end, house prices will resume falling to bring supply and demand into balance.
In this context, it is extremely unlikely that the vast majority of underwater homeowners will ever accumulate a penny in equity. Keeping them in their homes as owners means wasting thousands of dollars a year on excess housing costs only to be forced to arrange a short sale or face a foreclosure at some future point in time.
So, who benefits from "helping homeowners" in this story? Naturally the big beneficiaries are the banks. If the government pays for a mortgage modification where the homeowner is still paying more for the mortgage than they would for rent, then the bank gets a big gift from the government, but the homeowner is still coming out behind.
Read the full article here.
A Carlyle Group Mystery
Rohin Dharmakumar reports for Forbes India:
For reasons that remain shrouded in mystery, in July 2005 the Carlyle Group, a global private equity firm, sold its 16 percent stake in the education services company, Educomp, back to founder Shantanu Prakash. Incredibly, Carlyle made the sale at a loss of roughly 94 percent on the USD2.1 million (Rs 1,087 lakh) it had paid to acquire the shares in June 2000.What did Prakash have on Carlyle? Carlyle doesn't back away from deals this way.
While 94 percent is a really bad “haircut” — an investing term describing the reduction in the value of a security — it paled in contrast to what Carlyle had given up in the future. Less than six months after Carlyle’s exit, Prakash took Educomp through an IPO. The shares Carlyle sold back to him in 2005 for Rs 60 lakh are today worth roughly Rs 300 crore. Prakash’s total shareholding in Educomp is valued at over Rs 700 crore.
What Is Austrian Economics?
By Mario Rizzo
Many years ago (around 1982, I think) Jerry O’Driscoll and I wrote a paper that was the basis of an American Economic Association session. The paper was called “What is Austrian Economics?” The paper gradually evolved into our book, The Economics of Time and Ignorance.
The purpose of this book was to present Austrian economics in an updated fashion. To do this we needed to do two things: (1) uncover many of the fundamental ideas implicit in the tradition but not, as of then, sufficiently elaborated or made explicit; and (2) confront Austrian ideas with recent developments in economics, both mainstream and outside of the mainstream.
We faced many initial negative criticisms of the book. I will say that I was very disappointed by some of the old-guard reaction to the book. But do not confuse “old guard” with age because some of the greatest encouragement we received was from Professor Ludwig Lachmann who well understood the necessity of going beyond what the previous generation of Austrians had bequeathed us.
Remember that for many years Austrian economics was in the wilderness and the simple preservation of the Mises-Hayek tradition was a service of tremendous value. Many of those who were would-be Austrians in the 1970s and early 1980s really knew little of the tradition. They had to learn before they could make progress within the tradition.
But this resistance was more than loyalty to a tradition. It was symptom of the discomfort many felt in going from a stagnant research program to one that is growing, stretching, evolving and making errors. The true spirit of science, as Karl Popper continually taught, is to recognize that from errors we make some of our most important discoveries. Obviously, it is not that we strive to make errors. But bold thinking will, ex post, often reveal that the scientist was wrong. But we go on.
I do remember that some commentators made fun of us and the title of the book by saying things like “ignorance of economics” or “ignorant economists.” Some of these were outside of the Austrian camp and some were inside.
I also remember my friend Peter Boettke saying some years later that Ludwig von Mises was not afraid to criticize the great Eugen von Boehm-Bawerk. So neither should we fear to criticize previous Austrians.
This is history – much of which may not be known to younger generations of Austrians.
The history has a current purpose, however. We need now to refocus on the question: Just what is Austrian economics?
Read the full article here.
Many years ago (around 1982, I think) Jerry O’Driscoll and I wrote a paper that was the basis of an American Economic Association session. The paper was called “What is Austrian Economics?” The paper gradually evolved into our book, The Economics of Time and Ignorance.
The purpose of this book was to present Austrian economics in an updated fashion. To do this we needed to do two things: (1) uncover many of the fundamental ideas implicit in the tradition but not, as of then, sufficiently elaborated or made explicit; and (2) confront Austrian ideas with recent developments in economics, both mainstream and outside of the mainstream.
We faced many initial negative criticisms of the book. I will say that I was very disappointed by some of the old-guard reaction to the book. But do not confuse “old guard” with age because some of the greatest encouragement we received was from Professor Ludwig Lachmann who well understood the necessity of going beyond what the previous generation of Austrians had bequeathed us.
Remember that for many years Austrian economics was in the wilderness and the simple preservation of the Mises-Hayek tradition was a service of tremendous value. Many of those who were would-be Austrians in the 1970s and early 1980s really knew little of the tradition. They had to learn before they could make progress within the tradition.
But this resistance was more than loyalty to a tradition. It was symptom of the discomfort many felt in going from a stagnant research program to one that is growing, stretching, evolving and making errors. The true spirit of science, as Karl Popper continually taught, is to recognize that from errors we make some of our most important discoveries. Obviously, it is not that we strive to make errors. But bold thinking will, ex post, often reveal that the scientist was wrong. But we go on.
I do remember that some commentators made fun of us and the title of the book by saying things like “ignorance of economics” or “ignorant economists.” Some of these were outside of the Austrian camp and some were inside.
I also remember my friend Peter Boettke saying some years later that Ludwig von Mises was not afraid to criticize the great Eugen von Boehm-Bawerk. So neither should we fear to criticize previous Austrians.
This is history – much of which may not be known to younger generations of Austrians.
The history has a current purpose, however. We need now to refocus on the question: Just what is Austrian economics?
Read the full article here.
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