Saturday, December 31, 2011

A Fresh and Wild Perspective

This is a 25 minute piece with Slovenian born philosopher, Slavoj Zizek
looking at our almost 2012 capitalist world and telling us he sees an underlying energy for something very new. He calls himself a pessimist; but I am not so sure.

Another Miracle

A poet friend of mine, David Whyte, told me that Samuel Coleridge almost went mad after seeing the flocking patterns of starlings. Nothing in the scientific, linear world explained it. How could such complex, synchronized, flowing movements happen spontaneously, without apparent direction? Scientists can explain it now. It turns out hugely complex systems can organize themselves with as few as one simple principle - in this case, maintain distance and attitude in relation to the next starling in the pattern.This is true in complex human systems as well: any complex system organizes itself around clear principles of identity. If everyone in the system knows the principles and are committed to abiding by them, the system can self-organize, grow and develop in astounding ways. I like to look at this like Whittier did, when he said, "As for me, I know of nothing else but miracles."

Murmuration from Sophie Windsor Clive on Vimeo.

Some Questions Must Be Answered


if you move carefully
through the forest
like the ones
in the old stories
who could cross
a shimmering bed of dry leaves
without a sound,
you come
to a place
whose only task
is to trouble you
with tiny
but frightening requests
conceived out of nowhere
but in this place
beginning to lead everywhere.
Requests to stop what
you are doing right now,
to stop what you
are becoming
while you do it,
that can make
or unmake
a life,
that have patiently
waited for you,
that have no right
to go away.
~ David Whyte ~
(Everything is Waiting for You)

Sunday, December 25, 2011

Creation Charged: Two Poems and a Picture

The Sower  Vincent van Gogh

God's Word is in all Creation

By Hildegard of Bingen

No creature has meaning
without the Word of God.
God's Word is in all creation,
visible and invisible.
The Word is living, being,
spirit, all verdant greening,
all creativity.
This Word flashes out in
every creature.
This is how the spirit is in
the flesh—
the Word is indivisible from God.

 God's Grandeur

By Gerard Manley Hopkins

THE WORLD is charged with the grandeur of God. 
It will flame out, like shining from shook foil;  
It gathers to a greatness, like the ooze of oil Crushed.
Why do men then now not reck his rod? 
Generations have trod, have trod, have trod;    
And all is seared with trade; bleared, smeared with toil;  
And wears man’s smudge and shares man’s smell:
the soil Is bare now, nor can foot feel, being shod.  
And for all this, nature is never spent;  
There lives the dearest freshness deep down things;       
And though the last lights off the black West went 
Oh, morning, at the brown brink eastward, springs
— Because the Holy Ghost over the bent  
World broods with warm breast and with ah! bright wings.

Joy Expressed

Liz Foldi is a friend of mine. Among other wonderful things, she is a dancer. Part of her life is a dance ministry, using dance as an element of sacred expression, a kind of liturgy in motion. I find it profoundly uplifting. Joy Expressed. The words to the song are after the break.

Saturday, December 24, 2011

The Annunciation

The Annunciation  Fra Angelico

The Annunciation
By Denise Levertov

We know the scene: the room, variously furnished,
almost always a lectern, a book; always
the tall lily.

Arrived on solemn grandeur of great wings,
the angelic ambassador, standing or hovering,
whom she acknowledges, a guest.

But we are told of meek obedience. No one mentions
The engendering Spirit
did not enter her without consent. God waited.

She was free
to accept or refuse, choice
integral to humanness.

Aren't there annunciations
of one sort or another in most lives?
Some unwillingly undertake great destinies,
enact them in sullen pride,

More often those moments
when roads of light and storm
open from darkness in a man or woman,
are turned away from
in dread, in a wave of weakness, in despair
and with relief.
Ordinary lives continue.

God does not smite them.
But the gates close, the pathway vanishes..

She had been a child who played, ate, slept
like any other child - but unlike others,
wept only for pity, laughed
in joy not triumph.
Compassion and intelligence
fused in her, indivisible.

Called to a destiny more momentous
than any in all of Time,
she did not quail,
only asked

a simple, "How can this be?"
and gravely, courteously,
took to heart the angel's reply,
perceiving instantly
the astounding ministry she was offered:

to bear in her womb
Infinite weight and lightness; to carry
in hidden, finite inwardness,
nine months of Eternity; to contain
in slender vase of being,
the sum of power -
in narrow flesh,
the sum of light.

Then bring to birth,
push out into air, a Man-child
needing, like any other,
milk and love -

but who was God.

Are We Broke?

No. But it's amazing what per cent of the country thinks we are.

Expanding deficits. Public debt that has just passed 100% of GDP, or $15 Trillion. So when pundits and political leaders say we're broke, it's easy to believe them.

We are just not broke, and that's the simple truth. Why not? Because we have our own "fiat" currency that is not tied to gold or to a fixed peg to some other currency. Our currency floats freely with market conditions. The country has no debts in some other currency that could prove a problem. We can issue, or print as much as we like, whenever we like. If we owe money in dollars, we can always print dollars. Not by actually issuing a new pile of greenbacks, but by issuing notes or bonds - some IOU that says this note/bond/IOU is backed by the full faith and credit of the United States. As long as people accept that pledge, we have as much money as we want or need.

Thursday, December 22, 2011

2012: My Questions, Issues and Hopes

I am sitting in the Nashville airport, with a three hour delay in my flight to Phoenix to be with my son, Chris, who lives there with his Mom and Step-Dad, and my daughter Maren, who is flying in from Washington DC tomorrow. I want to list, in no particular order, the questions I carry into 2012; what I feel are a few of the major issues; and  one or two hopes for what may happen:

1. Europe has dominated my thinking for several months. I am deeply troubled by the top-down, imposed austerity that is being put in place by the Eurocrats. It is the apparently invariant neo-liberal orthodoxy practiced by the IMF for many years in the developing world, and adopted 100% by the Germans, and, with less power, by the French. The answer to any sovereign budget problem is "fiscal consolidation", which means austerity, budget cuts, and tearing huge holes in the social safety net and the powers of unions. Austerity will not work in Europe (as it also will not work in the UK or in the US). The problem is not public deficits, or public debt buildup. It's an imbalance in trade competitiveness, leading to large surpluses in Germany, almost identically offset by current account deficits in the periphery. Why would Germany want to punish its customers? It is nonsensical. What the periphery needs, and what they had before the 2008 crisis, is good vendor financing and PDI (Private Direct Investment). Europe, at some level, and in some form, will blow up in 2012: sooner, if the ECB continues to refuse the role of lender of last resort; later, if the ECB takes up the mantle of unlimited purchases of sovereign  bonds. There will be, early or late in 2012, I believe, a major credit event (one or more countries leaving the Euro, one or more major bank collapses, etc.) The US will get hit, and possibly, hammered. One or more banks may go down. My hope: this will give us a second chance to break up the banks into smaller, more manageable entities, and wipe out a ton of private mortgage debt that will never be repaid.

Behold, The Light!

Georges de la Tour, The Newborn

The Light that will not be put out. What an amazing promise! When we believe the Light is truly inextinguishable, our next question is "Do I belong to the Light? Am I somehow connected to the Light, so that, even if the Light stays on, I know I won't be disconnected from its Power?" Does Life have Purpose, and therefore Hope? Do I Belong? Is it all going to be OK? These are the perennial questions. Every faith tradition carries its own answers. But we need to do more than repeat the words and assurances of our personal faith tradition. We must know in our gut that this is so, and we can then repeat after St. Julien of Norwich:

          "All things will be well. And all manner of things will be well."

Thursday, December 15, 2011

Crisis Forecast

Michael Platt is the founder of the $30 billion hedge fund, Blue Crest. I believe the European crisis Platt describes has a 60/40 chance of happening by summer.This will shake up everything and hurt millions of people without any good reason. The "debtors are bad performers" and the "only solution to the debt problem is more austerity" views that Merkel and Sarkozy have rigidly carried into all policy discussions, and form the basis of the recently concluded summit agreement,are wrong, arrogant, and supremely dangerous. And when (if) this all blows up, who do you think will be deemed to be at fault? Certainly not the neoliberal economic dogmatists (Merkel, Sarkozy, Lagarde, Draghi). No, no, of course not. The blame will fall on the "worthless PIIGS" - the Portuguese, Italian, Irish, Greek and Spanish citizens who aren't disciplined enough to stay in the shops and off the beaches. It makes me weep!

Tuesday, December 13, 2011

Balance Sheet Recessions

A balance sheet recession occurs when some major asset class valuations collapse. The US experienced a balance sheet recession beginning in 1929 when the stock market tanked. Japan experienced one in 1990 when its real estate market collapsed. The US, and then most of the world, experienced one in 2008 when the US housing bubble burst. Recessions centered around the collapse in personal and corporate wealth are very different from a "normal" inventory/business cycle recession. In the one, both the consumer and business have been badly burned, and they are not willing to borrow for new spending or investments. In the other, borrowing and spending pick up soon after businesses begin rebuilding inventories, and money is moving back into the economy.

Why does this matter? A balance sheet recession requires a very different policy response than a normal business cycle downturn. Specifically, government spending must replace private spending, until both households and companies have repaired their balance sheets and are willing to invest/borrow/spend again. During the Depression, it took 12 years and a World War to pull the US out. In Japan, the deleveraging took 16 years. There is no reason to think the US will get by with a fast turnaround, especially when the fiscal hawks are committed to austerity and budget cutting. The lesson, as outlined by Richard Koo in The Holy Grail of Maroeconomics: Lessons from Japan's Great Recession, is that the government must be willing to step into the private sector's place, while households and companies deleverage, and deficit spend to support employment and economic growth. Let's take a look:

First let's look at a comparison between our housing price collapse and Japan's:

From Richard Koo's recent paper


From zero

There's a slow-rolling run on Greek banks. Deposits are down 20% from June 2010. Quite simply, this will not end well for Greece, or the Eurozone as a whole. 

The Grand Bargain "fiscal compact" agreed to in principle Friday morning by the entire EU, save Britain, is already developing cracks. Problems are showing up in Finland, France and even Germany. The tentative agreement is a stability-cum-budget discipline pact: all stick and no carrot. The market had imagined that Mario Draghi, head of the European Central Bank, would see this commitment to austerity as a green light to start buying sovereign bonds and printing money. After all, mid-last week he had hinted at exactly this; but Friday he said no, and asked, rhetorically, "How could anyone have thought the ECB would break its charter to print money by buying new issues of sovereign bonds?"

More and more commentators are now writing: "Why austerity, when the problem is trade imbalances?" Remarkably, I have never seen any quotation from "Merkozy" indicating they understood this was the problem, not excessive public spending.

There is no "deus ex machina" that will emerge onto the stage (or as Paul Krugman wrote, there will be no "Draghi ex machina" to save the day.) The Germans and the French determined that this was a morality tale, and that the bad countries had to be punished. Wrong story. Wrong solution.

I am, quite frankly, outraged by the level of their arrogance.

So now the tragedy will unfold. First up, most likely, will be the downgrades: sovereigns and banks, surely France and possibly Germany. Equity markets may shrug, but credit will react. Sovereign yields will rise and values will fall, exacerbating the capital raise problem for the banks, holding tons of sovereign debt on their books. Almost no one has money to pump into the banks, with the exception of Germany; so most will shrink their balance sheets to get to the 9% target by the required June 30 deadline. The just beginning recession will accelerate as credit flows slow down.

Somewhere, some time in the not too distant future, there will be the dreaded "credit event" (a Greek default, one or more big banks going under, etc.), and the messy pot of bad stew will overflow. When? Surely by spring or early summer, but no one really knows. Remember: Argentina chose Christmas to default; so this could break open in the next few weeks.

This is an entirely unnecessary and avoidable problem. The decision by Merkel and Sarkozy to frame this as a good guy/bad guy morality play, causing everyone to castigate the "worthless, underperforming Mediterranean countries", is an unmitigated disaster. I hope they both get flat out fired in the next elections.

And don't believe anyone who tells you we are decoupled from Europe!

Hang on!

Saturday, December 10, 2011

Princeton Students Occupy Goldman Sachs

As a Princeton grad, class of 1963, I cannot tell you how proud I am of my alma mater. We need to find ways to encourage our future leaders that they must do more with their lives than moving and making money. For their county's and for their own sakes, they need to reach higher, towards the distant stars, with dream building and deep contribution in the service of mankind.

Dragonflies Draw Flame


Gerard Manley Hopkins

As kingfishers catch fire, dragonflies dráw fláme;
As tumbled over rim in roundy wells
Stones ring; like each tucked string tells, each hung bell's
Bow swung finds tongue to fling out broad its name;
Each mortal thing does one thing and the same:
Deals out that being indoors each one dwells;
Selves - goes itself; myself it speak and spells,
Crying Whát I do is me: for that I came.

Í say móre: the just man justices;
Kéeps grace: thát keeps all his goings graces;
Acts in God's eye what in God's eye he is -
Chríst - for Christ plays in ten thousand places,
Lovely in limbs, and lovely in eyes not his
To the Father through the features of men's faces.

Walking in the Embers of Ayn Rand

Wednesday, December 7, 2011

Osawatomie, Kansas - 101 Years Later

In 1910, Teddy Roosevelt gave a fiery speech in Osawatomie, Kansas, declaring a "New Nationalism" and calling for a "Square Deal" for middle Americans. Yesterday, in the same city, Obama gave a fiery speech saying a time of decision for America is upon us, and calling for a"fair deal, a fair shot, and a fair shake" for the American middle class. Here's the speech:

Tuesday, December 6, 2011

A Greek Economist Speaks Out

Three Strange Angels


Three Strange Angels

Not I, not I, but the wind that blows through me! 
A fine wind is blowing the new direction of Time.
If only I let it bear me, carry me, if only it carry me!
If only I am sensitive, subtle, oh, delicate, a winged gift!
If only, most lovely of all, I yield myself and am borrowed
By the fine, fine, wind that takes its course through the chaos of the world
Like a fine, an exquisite chisel, a wedge-blade inserted;

If only I am keen and hard like the sheer tip of a wedge
Driven by invisible blows,
The rock will split, we shall come at the wonder, we shall find the Hesperides.
Oh, for the wonder that bubbles into my soul,
I would be a good fountain, a good well-head,
Would blur no whisper, spoil no expression.

What is the knocking?
What is the knocking at the door in the night?
It is somebody wants to do us harm. 
No, no, it is the three strange angels.
Admit them, admit them. 

~ D.H. Lawrence

Monday, December 5, 2011

Spirit Shining Everywhere


Will Europe Muddle Through?

It's possible, but my bet is no, although for at least the rest of this week, it may look like all the problems are behind us.

Take a look at this chart from today's markets, about an hour ago, from Zero Hedge.

Equities have screamed up in the last week, but short term Treasuries carry a negative interest rate, and have done so for two months. Tyler Durden, author of Zero Hedge, calls this market divergence between equity and credit "schizophrenic". Only a few minutes after Durden put up this chart, S&P announced Germany, France, Austria, the Netherlands and Finland were being put on 90 day negative credit watch, with the chance that their AAA ratings would be knocked down to AA. The S&P immediately gave up half its day's gain.

So what's the story? What narrative is at play here?

Friday, December 2, 2011

Newt Rising

Pretty amazing. First Bachmann, then Perry, then Cain, and now Newt. Will he crater too? I don't think so. Too many Republican primary voters want somebody other than Mitt Romney. And only Santorum, Huntsman and Paul are left (candidates who have not had a big run). Santorum lost his Senate reelection bid; Huntsman is too moderate; and Paul is simply way off the Republican reservation.

So Newt's it. One month to go until Iowa. Then New Hampshire, South Carolina and Florida. Romney is only favored in New Hampshire, and Newt is closing. In Iowa, South Carolina and Florida, Newt has a strong lead.

I predict Newt will win it. And if he doesn't, there will be a True Conservative 3rd party candidate. Probably not Newt. He's a loyal Republican. Keep an eye on Trump or Palin.

Most Conservatives/Republicans think Obama will lose. I don't. Democrats are winning the messaging war: the "Only Say No" Republicans are seen as acting on behalf of the  wealthy, not the middle class. The "Tax and Spend" label doesn't fit Democrats so well any more. Unemployment just dropped from 9.0% to 8.6%. One war is ended. Another is winding down. No successful terrorist attack on Obama's watch. And, in my opinion, Newt is unelectable.

Interesting times.

Europe Revisited

A great week for equities, both in Europe and the US. Is the crisis over? What's driving the markets?

The simple answer to both questions is: I don't know.

Let's try to figure out what the market drivers might be. The first big boost to the market was the coordinated Central Bank action to lower the cost of buying dollars. This launched the Dow on a 490 point upward ride that to many seemed hardly justified. And then outlines of a Grand Bargain began to emerge: first in a speech by European Central Bank head, Mario Draghi, calling for a "new fiscal compact", and hinting that with this in place, the ECB would loosen the pursestrings; then it was Sarkozy's speech on Thursday saying it was time for all the Eurozone countries to step up, to agree to new, more intrusive rules on supranational measures to ensure fiscal discipline, and thereby save the Euro; and finally today was Angela Merkel's turn to make the case for a new, disciplined financial structure for the Eurozone, as the only way forward.

Sarkozy and Merkel will meet on Monday, leading up to a Eurozone summit on Friday. I believe the markets believe an agreement will be reached on a "new fiscal compact" for the Eurozone, and with that agreement, the ECB will open up its big guns and begin broad-based, Eurozone-wide sovereign bond purchases to keep rates down and provide liquidity.

So now we must ask two more questions: will a deal be reached, and will the ECB then agree to be the lender of last resort?

My quick answers: a better than even chance a deal will be reached, but, in my view, a less than even chance that the ECB will then open up the printing press. The result would be generally positive for the markets.

Here's my problem: I think the fiscal compact for the Eurozone, designed as it will be to ensure minimal deficits and enforce fiscal discipline, is a horrible idea. And I strongly believe it will be rejected by a number of countries, possibly even its co-author, France, if it makes it to a popular vote.

Why horrible? If you exclude Greece, which really has behaved very badly on almost every dimension (overspending by the government, hiding true government debt levels to gain Eurozone entry, unaffordable social welfare programs, massive tax evasion), the other GIIPS countries have not been fiscally out of control. Italy came into the Eurozone with 120% public debt/GDP and was actually working that down, until the 2008 Crisis. Italy, Spain, Ireland, and Portugal have run consistent Current Account deficits, which they got by buying lots of good stuff from Germany. Pre-2008 private markets were financing these trade deficits. After 2008, when the private "hot" money dried up, these trade deficits had to be financed by the government sector, causing a blowout in public deficits.

I do not think these countries should be forced to endure years of austerity, huge amounts of unemployment, just to force down wages to make them more competitive with Northern Europe. Italy, Ireland, Portugal and Spain need ongoing, permanent "vendor financing", providing a predictable way to support their import purchases. This financing, possibly coordinated by the European Investment Bank, would take the form of direct investment in the countries. This way these countries could keep public deficits under control, and they would not get caught in the austerity/deflation trap.

If Merkel's idea of a fiscal compact is not modified in some way to provide financing for intra-Eurozone trade imbalances, I believe it will be rejected by voters in a number of Southern European countries. This will provoke a Eurozone breakup, and quite possibly a huge financial mess.

What am I looking for short term? First, will a deal be reached next Friday? If so, will the ECB become a consistent buyer of sovereign bonds? Then, what is the popular reaction in South Europe to "putting themselves under the German fiscal discipline yoke." And through it all, are the banks (where liquidity is drying up) staying alive? And finally, how bad is this austerity-created recession in Europe going to be?

Do I think Europe will muddle through? Quite possibly for a while. But if the all stick-no carrot approach to a new fiscal compact is not changed, a crisis cum true credit event will happen in Europe before the 2012 elections.

Friday, November 25, 2011

Is Europe About to Unravel?

From The Financial Times

Rates in Italy continue to skyrocket. Today, Italy had to pay over 8% to successfully complete an auction of 2 year notes. There is a ton of refinancing due in early 2012. Do not think Italy can afford to pay 7-8% for their money. What could happen? Default, with a lot of Italian, French and Belgian banks suffering unmanageable losses on their holdings of Italian bonds.

The fix was supposed to be the European Central Bank finally stepping in and becoming a visible, credible buyer of last resort for Eurozone sovereign bonds. Analysts thought the ECB and Germany were playing sly, seeking to force out Papandreou in Greece and Berlusconi in Italy. Turns out it was more than that. These two have been replaced by unelected technocrats (Monti in Italy and Papademos in Greece), but neither the ECB nor Germany have budged on the lender of last resort issue.

Yesterday, Merkel, Sarkozy and Monti met, and Merkel reiterated her firm opposition to "printing money" in any form (either by issuing Eurobonds or by supporting existing sovereign debt to ensure yields are held down). She told the world what the "true solution" was: a much higher level of European integration with automatic and severe penalties for any country that cannot keep their economic house in order. Sarkozy, who had initially pressed for much more aggressive ECB action, relented, and supported Merkel. There's an EU meeting coming up in early December. She wants to present a roadmap to heads of state then.

Will the 17 Eurozone countries sign up for such a program, surrendering significant sovereignty in financial areas to a central bureaucracy, assumed to be under German control? I don't think so. And because all of this will require treaty changes, which mean public referendums in some countries (remember that Merkel and Sarkozy went all out to sabotage a proposed referendum recently in Greece), we are talking one to three years to get this done, even if all heads of state wanted to proceed, which I doubt will happen. So far, Merkel has said no Eurobonds, until the Master Plan is agreed to.

Merkel's Master Plan is a disaster. It's all fiscal consolidation and central (German) control, with no sense of understanding that not every country can have the same labor competitiveness as Germany, or that Germany should be thankful for the periphery countries who have been buying much of their exports, instead of beating them into the ground in the name of austerity and good discipline.

It's a bad brew. I don't think Merkel will sell this plan. And I don't think markets will wait much longer.

Markets in December will be interesting.

Totally Cool

Thursday, November 24, 2011

Structures of Oppression Are Falling

I wake up most mornings with a smile on my face, giving thanks. It is often not a specific statement of "Thank you God for..." or "I am thankful for..." It's rather a feeling of quiet joy. Not a big rush. Not exultation. But quiet, subdued.

I have learned not to push my feelings around, or try to overly manage them. But I do ask "Why am I happy today? What is the source of this quiet joy I feel?" My answer will often depend on what I am gazing at. We have a lovely backyard, that is now going through its normal rituals of fall colors, in preparation for winter. There's an oak leaf hydrangea just out the living room window, with its leaves turned wine-colored red for its late fall display. And there's a lovely fruit tree, still all aglow and dressed in yellow. I will notice these, perhaps, and say to myself, "Ah, that's why I am happy. Because I am alive and can see and be together with this lovely tree."

But there is something else, a consistent thread that fills my heart with joy. I think the oppressive structures around the world are falling. Humanity is on the move to greater dignity, fairness and respect. The Arab Spring. The possible breakup of the Eurozone. Occupy Wall Street. The Ohio referendum overturning Governor Kasich's anti-collective bargaining law. The effort just underway in Wisconsin to recall Governor Walker.

The insistence on equity, mutual respect, a level playing field, a chance for a good life - this energy is showing up collectively in different forms and in different places. Many will question my assembling a very disparate group and placing them under one metaphoric umbrella. But look through each area: isn't this about individuals, groups and countries standing up for themselves and insisting on being treated fairly?

This may be hard to see in Europe right now; but the reason the Eurozone will surely fail in its present form is that it represents one group of nations dictating to another. The Eurozone is an oppressive structure and for that reason, among others, it will not endure.

What about Occupy Wall Street? At heart, this is a movement springing out of a deep sense that America's economic and political game has become rigged, that the well to do get the economic breaks, and that our Democracy is no longer democratic. Everyone in the movement knows that true democracy is possible, where all people are respected and all voices are heard. They know an important truth, that if they ever are going to birth this "open space democratic system" into the world, they need to know, in their bones, how it works and what it feels like. That is why they are not so focused on specific demands of the larger system.

The emergence of Occupy gives me faith that our oppressive political and economic structure will be changed, transformed. And I understand that this change may come at great cost, that a good part of our financial system must be brought to its knees, must face destruction before transformation will be possible. This happened in the 1930s'. It has not yet happened with our current crisis. But I think it will. If not all at once, in good part. This is not utopian; it is another step in our country's growth to a more perfect union.

The Arab Spring? An obvious upwelling of the human spirit in many parts of the Middle East, where all this seemed, until recently, unlikely, if not impossible. Listen to me. Give me a voice. I want to be a part of the political conversation. Autocrats and oppressive economic elites cannot design the system to favor only their own interests. Not any more.

Will all of this come to a predictably happy outcome? Surely not. The forces of oppression are hugely powerful, and elites do not give up power or let go of the structures used for control, easily. What has happened that sources the transformation is that everyday folks now know that the dominance of the oppressing elite is not inevitable. It is not written in the stars. It is not destiny, or because God wills it. The situation can be changed. The oppressive structure can be overturned.

Will we get some Islamist states out of the Arab Spring? Will countries that leave the Euro face huge economic problems? Will there be some violence and dereliction in the Occupy movement? Yes to all these questions.

And Spirit is moving. And that gives me joy.

"What I Do Is Me, For That I Came."

From Naked


Gerard Manley Hopkins

As kingfishers catch fire, dragonflies dráw fláme;
As tumbled over rim in roundy wells
Stones ring; like each tucked string tells, each hung bell's
Bow swung finds tongue to fling out broad its name;
Each mortal thing does one thing and the same:
Deals out that being indoors each one dwells;
Selves - goes itself; myself it speak and spells,
Crying Whát I do is me: for that I came.

Í say móre: the just man justices;
Kéeps grace: thát keeps all his goings graces;
Acts in God's eye what in God's eye he is -
Chríst - for Christ plays in ten thousand places,
Lovely in limbs, and lovely in eyes not his
To the Father through the features of men's faces.

Wednesday, November 23, 2011

The European Morality Tale

We are told repeatedly that the problem in Europe is that the Mediterranean South (Greece, Italy, Ireland, Portugal and Spain) have been undisciplined, lazy profligates. When the liquidity cum solvency problems blew out into the open, first in Greece, then in Ireland and Portugal, there seemed to be a clear morality tale: Europe's South needs to cut out all the fat, dramatically reduce the size of government, and enter a period of fiscal austerity in order to "get their houses in order".

It turns out this interpretation, which has driven all Troika (ECB, IMF, and EU) and German/French policy input is badly flawed. It is correct for Greece. It is incorrect for the other four. Take a look at these charts, looking at three variables in three different charts: Net Government Lending (i.e., Deficits), total government debt as a percent of GDP, and the current account balance:

You can see that Spain and Ireland had lower debt levels than Germany; Portugal was essentially the same as Germany; and only Italy was significantly higher, starting in 1999 when the Euro began, at 110% and coming down in 2007 (just before the Crash) to just over 100%.

Monday, November 21, 2011

The Misery Index

Jeffrey Sachs, author and liberal pundit, has developed a Misery Index (believe Sachs is following in the footsteps of others). This adds up a country's budget deficit, its unemployment rate, and its current account deficit. He then adds Tax receipts and Government Outlays (as a percent of GDP), suggesting this is a good way to compare countries on some key measures. Take a look:

The chart points up some very interesting stuff:

1. Northern Europe is a whole lot less "miserable" than we are. But so is Japan and Canada.

2. The GIIPS countries are truly "miserable", except for Italy (before their bonds blew up).

3. Looking at these numbers, it's not at all apparent why Italy is the "undisciplined, profligate, Mediterranean" country, whereas France is disciplined and well run: Italy has a lower budget deficit ratio, a better Misery Index, collects almost as much in taxes (% of GDP) and spends considerably less compared to France. And except for the Current Account category, Italy doesn't compare too badly with Germany.

4. Who can possibly say the US is overtaxed? We have the lowest Tax (percentage of GDP) of any country on the list. The only large country close to us is Japan.

5. As for spending, we are also at the bottom of the list. Only Canada, Japan, and Luxembourg spend at our low levels.

What utter hogwash we are fed every day in our economic/political conversations!

Sunday, November 20, 2011

Where is Heaven?

From Andrew Sullivan at The Dish on Daily Beast

Sunday Morning

Complacencies of the peignoir, and late
Coffee and oranges in a sunny chair,
And the green freedom of a cockatoo
Upon a rug mingle to dissipate
The holy hush of ancient sacrifice.
She dreams a little, and she feels the dark
Encroachment of that old catastrophe,
As a calm darkens among water-lights.
The pungent oranges and bright, green wings
Seem things in some procession of the dead,
Winding across wide water, without sound.
The day is like wide water, without sound,
Stilled for the passing of her dreaming feet
Over the seas, to silent Palestine,
Dominion of the blood and sepulchre.


Why should she give her bounty to the dead?
What is divinity if it can come
Only in silent shadows and in dreams?
Shall she not find in comforts of the sun,
In pungent fruit and bright, green wings, or else
In any balm or beauty of the earth,
Things to be cherished like the thought of heaven?
Divinity must live within herself:
Passions of rain, or moods in falling snow;
Grievings in loneliness, or unsubdued
Elations when the forest blooms; gusty
Emotions on wet roads on autumn nights;
All pleasures and all pains, remembering
The bough of summer and the winter branch.
These are the measures destined for her soul.

A Sweet and Motley Crew

Diaster Almost Upon Us?

From a Goldman Sachs report on Zero Hedge

The charts above show serious stress in the Eurozone: Overnight rates are moving up steeply; the ECB is having to be an aggressive buyer, and still sovereign bond yields in Italy and Spain are at dangerous levels; and banks have more money sitting in the ECB than they had there during the 2008-9 crisis.

Here's what The New York Times said on Friday:

"Nervous investors around the globe are accelerating their exit from the debt of European governments and banks, increasing the risk of a credit squeeze that could set off a downward spiral."

Will the ECB step up aggressively? New head Mario Draghi yesterday warned European heads of state not to count on the ECB to bail them out, and that they had to hurry up and put the agreed upon funding facility in place (the European Financial Stability Facility). Nevertheless, when the financial structure begins to shudder, I believe the ECB will step up.

Will it be enough? Short term, perhaps. Longer term, I don't think so, as long as everyone (the ECB, the IMF, the EU, Germany and France) stay on the austerity page. The austerity approach/model is deeply flawed. I believe the fierce insistence on cutting government budgets in order to reduce deficits will not work. Europe, and in particular, those countries being forced into austerity (Greece, Ireland, Portugal, Italy, Spain, and soon, France) will see their budget deficits increase, as withdrawing government spending from the economy lowers GDP, reduces tax revenues, and increases welfare transfer payments (automatic stabilizers).

At some point, like an overworked, overheated engine, something will blow. And then we will have quite a mess, and, I will add, a completely avoidable mess!

And this will not just clobber Europe. It will give us a roundhouse right as well.

Saturday, November 19, 2011

Upward Mobility in America

  Pew Economic Mobility Project has just published another in their series of studies on upward mobility in the US. This is titled Cross-National Research on Intergenerational Transmission of Advantage. It was done in conjunction with The Russell Sage Foundation and the Sutton Trust, and the full results will be published next Spring.

The chart above demonstrates the main finding:

          "In the United States, there is a stronger link between parental education and children's economic, educational and socio-emotional outcomes than in any country investigated." (See top line study results)

Cognitive means IQ and other test scores. Economic means income and labor market position. Educational is grades and final attainment. Physical is health and birth weight. And socio-emotional is mental health and childhood behavior. So what this says is:

Who we are and who we become is directly related to who are parents are in terms of education, and presumably income. If our parents are well off/well educated, the odds are better for us that we will be intelligent, well off, well educated, healthy and happy. And this is more true in the US than any other country studied.

Here's another Pew Study, this time with the Brookings Institute Economic Mobility: Is the American Dream Alive and Well?


Whither Goest Thou?

From Naked Capitalism

Friday, November 18, 2011

Utterly Transcendent

Which Came First?

From Naked Capitalism

More Images from Occupy Wall Street

On Brooklyn Bridge

The "Bat Projector" Showing on the Verizon Building

In Foley Park, before marching to Brooklyn Bridge

Europe on the Brink

Italian 10 Year Bond Prices from Zero Hedge

This chart shows 16 small green ovals showing where the European Central Bank (ECB) intervened in the Italian debt market over the last two weeks, driving bond prices up. There are two larger rectangles showing periods where the ECB was not a buyer, and prices fell off a cliff.

The European issue has come down to this: Will the ECB declare itself to be a committed buyer of European sovereign bonds to ensure yields stay at affordable levels (say 5%), or not. Today, the Central Bank were heavy buyers, focusing on Italian and French debt, and here's what happened ( all charts from Zero Hedge):

The chart shows the trend in yields for the list of bond issues. As you can see, today the ECB drove down Italian and French yields, but left Spain pretty much on its own. If the ECB would commit to this sort of buying at all times, whenever needed, the sovereign bond attacks would end. But will they do it?

Thursday, November 17, 2011

OWS - Today in New York

Foley Square, New York, 5:30pm, Thursday, November 17

In Chicago, it is almost 5pm; so it's 6pm in New York. 10,000 people are in Foley Square in New York as I write this. They are expected to move towards the Brooklyn Bridge sometime this evening, and connect with at least one other group. The police are waiting at the bridge; they are all around the protesters and have been all day. Quite a bit of exceptionally well-documented rough stuff as people were arrested and put in the paddy wagon.

On Fox News last night, Bill O'Reilly declared the movement dead. After all, he told us, it's only made up of the homeless, the drug addicted, and other dysfunctional people. "There were good people to start with," O'Reilly said, "But they've all gone."

Popular support for the Occupy movement has dropped into the high 30s' from the mid 40s'. Obama and other Democrats are being warned of the "Occupy minefields", if they voice support for the movement. America doesn't like troublemakers, who upset the public spaces with no clear agenda, no leadership, no organization. Just another group in the endless list of freeloaders who want something for nothing.

It surprises me some, and disappoints me a lot that Fox and others have no real listening for what is going on. Worse...they have no curiosity about it. Why does the prejudgement always seem to come first? How can they possibly understand if this is something important, or just passing spite, if they don't engage the protesters honestly? Why don't they seem to care? The simple answer is that they are threatened; but I am not so sure. I simply do not think they can see or hear or understand anyone who has deep questions about America, her economic system and her distribution of wealth and power.

Winter will not end this. Folks may not sleep outdoors all winter in every city, or they might. Neither outcome would surprise me. Neither outcome is determinative of the movement's power. People listening deeply to each other about what would be a more just and more beautiful America...people who have experienced the utter magic of shared dreaming about things that matter deeply...these people are awakening, and they are waking up with others, together, in shared and beloved community.

Have you ever felt that energy, that life force, that sheer beauty and magnificence? If you have, then you know this is the fire that once lighted, cannot be put out. Understand...I make no political prediction. But I state as fact that everyone who has seriously engaged in the Occupy conversation, to the point where they have experienced some sense of "Aha", or some rush of joy, or some brief glimpse of the transcendent, knows they will never be the same again.

And dreams are much more powerful when they build from the bottom up.

I am reminded of Jesus and the Samaritan woman at the well, a story told only in John. Jesus tells her that the water he will give her will cause her never to thirst again, that it will be like a "spring inside, welling up to eternal life" (by which I understand, opening up inside the individual to kingdom consciousness). Once this water has been recognized, nothing can ever be the same.

That's what I believe is happening. Perhaps not for everyone. And yes, there are bad eggs and a violent fringe. And why wouldn't the homeless wander into camp for free meals? But for those who drink deeply of this special water, nothing will ever be exactly the same as it was.