tag:blogger.com,1999:blog-76225823356390677042024-03-05T06:26:29.667-06:00Jim Stuart's BlogLooking at the World with Clear and Quiet EyesJimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.comBlogger135125tag:blogger.com,1999:blog-7622582335639067704.post-22469852580706884842012-01-14T01:47:00.001-06:002012-01-14T02:02:05.568-06:00After A BreakI have been caught up in year end and post holiday projects for the last 10 days, and have been away from the blog. I am finally up to date, more or less, and post these words from the lovely Raffles Hotel in Singapore. Tomorrow, after lunch, we get on a Seaboune cruise ship to travel down into Indonesia, and eventually to Bali. My 95 year old Dad is leading the charge, which is remarkable in more ways than I can say.<br />
<br />
Some things have shifted in my 10 day absence:<br />
<br />
* Europe has moved from pre-crisis to muddling-through mode, and the equity markets in the US have responded happily. Predictions of decoupling (US from Europe) have been plentiful. Does this make sense?<br />
<br />
* Romney appears to be the unstoppable frontrunner in the Republican primary field, after his impressive win in New Hampshire last Tuesday. Gingrich, aided by an infusion of money to his SuperPac, is beginning to execute a scorched earth attack in South Carolina, calling Romney a vulture capitalist and deriding his claim to having created 100,000 jobs while CEO of Bain. Will any of this make any difference?<br />
<br />
* The economy added 200,000 jobs in December and the unemployment rate dipped to 8.5%. The S&P has risen 11% since mid-December and at Friday's 1289 close is just 5.5% off its summer high of 1364. The start of a bull market?<br />
<br />
* The US has announced tough new Iranian sanctions, using the Fed to block countries and companies that trade with Iran, including as the key target, oil trade. Europe will join us, though it may be 6 months before the sanctions are put in place. Iran in response is threatening to close off the Straits of Hormuz, while we are using back channels (unusual) to tell the Supreme Leader that this is a red line that Iran must not cross. A lead up to war?<br />
<br />
Four questions. My personal answers (and remember, these are just my forecasts, and I miss as many as I make): No to all four questions, with comments below.<br />
<br />
Europe will not muddle through. If there is no credit event between now and a year from now, then I will be wrong. The ECB has stepped up significantly in providing liquidity to Europe's banks, though only intermittently and indirectly to its sovereigns. This helps a lot, but will not be enough. Much of the Eurozone is already in recession; the rest will follow soon. By itself, this is not disastrous. But as it takes out potential export markets for Greece, Ireland and Portugal, causing their deficits to accelerate, the increased needs of these countries for funding, over and above their current Troika agreements, could break the bank, and cause a sovereign default. The Troika, Greece and the IIF have suspended the "voluntary bond restructuring" talks. Hedge funds have bought Greek bonds in quantity with clear intentions not to accept a voluntary restructuring, and force a CDS triggering event, where they would be paid out in full. Only the IMF (amazing to say) has stepped into the policy zone to declare that an austerity only format will fail, but they have been overruled (up until now) by their Troika partners - the EU and the ECB. Too little vision. Too much austerity. This will not end smoothly.<br />
<br />
In terms of the GOP, Romney may lose South Carolina, or he may squeak by, but it is most likely too late to stop him. He will survive the Bain attacks for now, but he will not survive them in November. They go to the heart of his candidacy, which is his claim that he understands how to create jobs from his private sector experience, and that he created 100,000 jobs while CEO at Bain. He did not create 100,000 jobs while at Bain, when the company/plant shutdowns are factored in, and unless Romney releases a detailed summary fat sheet on the 100 or so deals that were done by Bain when he was CEO, this will dribble out in painful, slow form as investigative journalists do the necessary research. Venture capital firms are job creators; private equity firms are not. Bain is both. The deals Romney claims the most job-creating credit for (Staples, Sports Authority) were venture deals. Most of the 100 deals, though, are private equity deals, where the objective is always to squeeze the income statement and balance sheet to create cash flow to service the debt you used to buy the company, and to pay all kinds of hefty management fees so the investors can get their money back. There's nothing wrong with private equity. It's an important part of the capitalist system. Where Romney is way off base is to claim that this private equity work makes him a knowledgeable job creator. It doesn't. This is Romney at his dishonest best.<br />
<br />
As for my forecast that if Romney is the GOP nominee that there will be a third party run (50% chance) and from there, a further 50% chance that the Party will splinter, we will just have to wait and see. At this moment, the odds seem to be shifting against it. But does anyone really know what Ron Paul will do? Does even Ron Paul know? It is just too early to tell.<br />
<br />
As for the economy, I feel confident in saying that this is not the start of a bull market. The employment number will prove to be a bit of a pre-Christmas, seasonal fluke. Europe is slowing, as is China. Corporate margins and earnings have been stellar in 2011. So isn't it time the historically low PE ratio of around 12 moves back up? I can only say that I don't think so. There is little real demand in the economy. Obama has deftly held off the GOP long knives on budget cuts, but there will be some, even if the President is not contested at the end of February in this drive to extend the payroll tax cut for the full 2012 year. Earnings forecasts will begin to surprise on the downside (already beginning). So 2012 looks tough, even if Europe does muddle through. If there is a credit event in Europe, watch out!<br />
<br />
As for Iran, I am an optimist. Their saber rattling in the Straits reminds Joe Klein of North Korea's way of acting when they wanted to talk, but didn't know how to begin the diplomatic conversation. I think he is right, and he also warns us that this is scary stuff. In a big war game a few years ago, to simulate how we would do against a swarming attack on our fleet by small Iranian PT type boats, we lost 16 warships. A 36 mile wide strait is not where you want a US fleet to have to navigate. But Iran knows they would lose, and that their naval, air force, and command and control assets would be wiped out with little apparent gain, as the Straits would be reopened; the oil tanker traffic would restart; Iran's oil exports would be mostly stopped; and the regime would be under serious threat. This picture seems far too risky. I predict real negotiations will begin before summer.<br />
<br />
I am told by family and friends that I overdramatize, always insisting that this conversation, or this chain of events, or this specific event is of enormous, even world-changing importance. And I think they are right. Having said that, I think 2012 will prove to be a world-changing year. Major stuff, sometimes unseen or misunderstood in the past, will be coming up, moving into focus and impacting the current flow of events in surprising ways.<br />
<br />
A Major Year. So let's get on with it!Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com1tag:blogger.com,1999:blog-7622582335639067704.post-65799815945031346292012-01-03T17:20:00.000-06:002012-01-03T22:15:39.110-06:00Other Things to Watch in 2012This post is a sort of addendum to yesterday's. Lots of other interesting stuff is going on that will bear watching in 2012. Here are just a few of those:<br />
<br />
<b>* Governor Walker Recall: </b>About 515,000 valid signatures supporting a recall vote for Governor Scott Walker of Wisconsin must be submitted by mid-Janury in order to force a recall election.It looks like this will happen, with a sufficient surplus to survive challenges. Polls show Walker should lose; and if so, this would be just the third recall of a governor in history. If Walker loses, this will be interpreted by many as evidence that Republicans, after November 2010, overreached, and that their anti-union, anti-Medicare, anti-entitlements, anti-taxing the wealthy programs are not supported by the Majority. This might be a harbinger of what happens come November.<br />
<br />
<b>* Healthcare: </b>The Supreme Court will hear the ACA case in March, and will probably rule in August. I believe it will be ruled constitutional. If so, this would be a boost for Obama. Also watch trends in healthcare costs. There was a significant slowdown in Medicare cost increases in 2010 and 2011, with analysts suggesting this might be due to health care organizations getting ready for the ACA going live in 2014. If the cost moderation trend continues, this would be a strong positive, suggesting the ACA might help moderate costs. Also keep track of what employers begin to do with their healthcare coverage as 2014 approaches. One of the "doomsday" scenarios has 50 million plus employees being dropped from employer healthcare programs, versus the forecasted 15 million. If this proves to be the case, the forecasted ACA budgets will be busted wide open; if not, we might come to find this bill will pay for itself.<br />
<br />
<br />
<a name='more'></a><br /><br />
<br />
<b>* Occupy Wall Street: </b>Will this movement continue through the Winter of 2012 and into the Spring? If so, it could significantly shape the election conversation around<b> </b>the themes of <b>fairness, dignity, America's priorities, job creation, and what might be needed to "reinvent" American democracy. </b>The media has mostly downplayed or ignored OWS, and popular perceptions turned from quite positive to moderately negative, most likely based on conflicts with local authorities (police) and a feeling that "the occupiers have made their point and it's time to go home." But if OWS proves to be a "durable energy", not a short term burst, it might well have a game changing affect on the coming election.<br />
<br />
<b>*Taxes/Tax Reform:</b> Republicans are coming off a loss on the payroll tax extension debate. What will they do in the Conference Committee charged with working out a full year extension (versus the current two months)? Some analysts predict another stalemate, like the Supercommittee, which might lead to another PR hit to Republicans, with the charge that the only tax cuts they like are ones for the wealthy. The next interesting question is what, if anything, will happen to discussions on the Bush tax cuts over the Spring and summer? If Republicans are confident of winning the Presidency and holding the House, they might choose to do nothing. When the tax cuts expire on January 1, they can be quickly reinstated when the new Republican President comes into office. But if GOP leaders are not certain of winning, they might choose to enter serious negotiations with Democrats under the tax reform banner. They will seek to make the Bush tax cuts permanent in return for broad tax reform and (in theory) offering new tax revenues from the reform program to Democrats. This is the same discussion Boehner and Obama had, or attempted to have over the summer, during the debt ceiling talks; but at that time, Republicans had the leverage (they were willing to force the Government to default). Now the leverage is reversed: if Obama wins a<b>nd then does nothing, the Bush tax cuts will expire, and Republicans would not be able to overcome Obama's veto of any legislation put forward by Republicans extending, or making the tax cuts permanent. </b>This will be interesting to watch. Republicans don't want to give the President a big win on tax reform; but they want to keep the Bush tax cuts in place even more.<br />
<br />
<b>* China: </b>China may crack a bit this year. There are signs the economy is slowing and that there are a lot of bad loans out there in the countryside, following the huge stimulus in 2008-2009. Lots of evidence of a real estate bubble. Capital is starting to leave. And more and more protests are kicking up. With a deep slowdown in Europe very likely, this export dependent country may be in a bit of trouble. Keep an eye out for a devaluation of the yen to kick up exports, which could cause a chain reaction of protectionist counters. China may be headed for troubles, economic and political, just as they are preparing for a leadership transition. I do not feel China will prove to be the invulnerable, endlessly successful, perpetual creditor nation that we have feared. In the next few years, she will come more or less down to earth. The problem is that this will mean the world economy is suffering, and all exporting counties will struggle.<br />
<br />
<b>* Japan: </b>Following the Fukushima earthquake/tsunami disaster, hard money analysts and inflation hawks are, once again predicting disaster for Japan. This country, with its perpetual deficits, huge public debt levels, low inflation, low unemployment, and rock bottom interest rates has been a perpetual irritant to conservative economists. The neoliberal, austerity-promoting, deficit/debt critiquing, sovereign default-fearing IMF/EU/UK Tories/US Conservatives/conservative economists are <b>uniformly appalled by Japan's fiscal and monetary "extravagance": where the authorities should be cutting fiercely, they are spending relatively freely and suffering no apparent ill effects.</b> The only explanation any of the hawks can come up with is that the Japanese are very loyal, and have simply continued to buy Japanese Government Bonds (JGBs'), despite the underlying bad economics. So prices stay up and rates stay low, and inflation never has a chance to take off. Right now, one or two major pension investors in Japan are starting to question their JGB holdings, and the hawks are predicting imminent disaster, and quite possibly sovereign default. <b>It won't happen. A sovereign country, issuing a non-pegged, non-convertible currency cannot default on debts in its own currency. It has an infinite amount of that currency, and it can buy its own bonds all day, in any quantity. And this will not lead to runaway inflation, if there is slack in the economy, as the post 1990 example of Japan shows us. Why economists and policymakers cannot look at Japan, and revise their theories is beyond me.<u> But please do not short Japanese bonds!</u></b>Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-72990051641377632372012-01-03T16:56:00.002-06:002012-01-03T16:58:44.897-06:00That Fierce EmbraceDavid Whyte, author of the poem included below, <i>"Self-Portrait", </i>relates how he wrote this poem in Amsterdam, after visiting the Van Gogh Museum, and looking at some of the artist's self-portraits. "I was struck," David says, "by how the artist looked into the mirror, hence into our image, without a trace of self pity. I returned to my hotel, determined to see if I could write a poem expressing the same qualities I saw in Van Gogh's eyes. When I dropped into the poem, and the image came up, I was surprised at the first line I wrote down." As was I, when I first heard the poem.<br />
<br />
For me, the question is about living authentically. Can I look Life in the Eyes, without recoiling or seeking escape? Am I ready to be defeated, perhaps more than once? Can I fall into Life and therefore towards what I long for? Can I speak quietly, saying "This is Who I am." Can I look the fierce and flying owl directly in the eyes, even as he swoops to attack?<br />
<br />
If we can, we will touch God.<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3X4bRLV_0fttCZUhi4UubxYis1_VMLDZA-t3cCMlHYZ6ElSVq2N1XpezpsLLSTAJ01idj3DuK9jca6JM6Z4X1VC1qI6crN3S4m7S38VGd9qYpbWpVixiOsjd83t0nsB-ap3EWJ8tzDqNX/s1600/Screen-shot-2012-01-03-at-12.39.44-AM.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="566" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3X4bRLV_0fttCZUhi4UubxYis1_VMLDZA-t3cCMlHYZ6ElSVq2N1XpezpsLLSTAJ01idj3DuK9jca6JM6Z4X1VC1qI6crN3S4m7S38VGd9qYpbWpVixiOsjd83t0nsB-ap3EWJ8tzDqNX/s640/Screen-shot-2012-01-03-at-12.39.44-AM.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">From nakedcapitalism.com<br />
<br />
<div align="center" class="MsoNormal" style="text-align: center;">
<b style="mso-bidi-font-weight: normal;"><u><span style="font-size: 14pt;">SELF-PORTRAIT<o:p></o:p></span></u></b></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">It doesn’t interest me if
there is one God<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">or many gods.<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">I want to know if you belong
or feel<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">abandoned.<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">If you know despair or can
see it in others.<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">I want to know<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">if you are prepared to live
in the world<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">with its harsh need<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">to change you. If you can
look back<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">with firm eyes<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">saying this is where I
stand. I want to know<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">if you know<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">how to melt into that fierce
heat of living<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">falling toward<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">the center of your longing.
I want to know<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">if you are willing<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">to live, day by day, with
the consequence of love<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">and the bitter<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">unwanted passion of your
sure defeat.<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">I have been told, in<i style="mso-bidi-font-style: normal;"> that</i> fierce embrace, even<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;">the gods speak of God.<o:p></o:p></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span class="Apple-style-span" style="font-size: x-small;">By David Whyte<o:p></o:p></span></b></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<b style="mso-bidi-font-weight: normal;"><span class="Apple-style-span" style="font-size: x-small;">From <i style="mso-bidi-font-style: normal;">Fire in the Earth<o:p></o:p></i></span></b></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<br /></div>
</td></tr>
</tbody></table>
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-4681861586406609822012-01-02T16:42:00.001-06:002012-01-02T16:42:28.124-06:00Possible Tipping Points in 2012In 2002, Malcolm Gladwell wrote a fine book on "tipping points", the places where small changes can result in huge shifts in what happens next. Different patterns, events and energies have come together, often unnoticed. Then a single event happens that sets in motion a host of new and often unexpected happenings. Something new is emerging, that only a short time before the triggering, or "tipping" event, would have been difficult to predict. Later, when people know what to look for, the pre-tipping point currents are visible (as they would have been before, if you knew what to look for).<br />
<br />
Tipping points of historical importance are infrequent. As Newton told us, a body in motion tends to stay in motion. Things tend to go on as they have been going.And there's another Newtonian Law - to every action there is an equal and opposite reaction. So when some force pushes for change, other elements resist.<br />
<br />
So what are some good examples of what I consider <b>historical tipping points</b>? The Declaration of Independence, which declared that "all men are created equal, with the right to life, liberty, and the pursuit of happiness." This had never been <b>declared</b> before. It had been thought about, written about. But it was the <b>declaration</b> of these words that created new possibilities and tipped the Western world toward democracy.<br />
<br />
The Emancipation Proclamation, that corrected a fundamental flaw in the Declaration, and set in motion a chain of events that we are still working out today. The Assassination of Archduke Ferdinand, which set in motion a chain of events that led to World War I. The Japanese attack on Pearl Harbor, that stopped the powerful American isolationist movement in its tracks, bringing the US into World War II. And 9/11 that initiated the War on Terror.<br />
<br />
And more recently, on December 17, 2010, Mohamed Al Bouazizi, a Tunisian fruit vendor, set himself on fire in protest of government policies. He died on January 4, 2011. Ten days later, Tunisia's President Ben Ali fled with his family to Saudi Arabia, and the Arab Spring had begun.<br />
<br />
So the tipping points I am looking for are big deals, true pivot points in history. Looking to 2012, I see four possible tipping points:<br />
<br />
<b>* collapse of all or part of the Eurozone</b><br />
<b> * fracturing of the Republican Party</b><br />
<b> * Iran standing down on nuclear weapons</b><br />
<b> * Israeli-Palestinian two-state peace agreement</b><br />
<b><br /></b><br />
<b></b><br />
<a name='more'></a><b><br /></b><br />
Let me take each in turn:<br />
<br />
<b><u>Eurozone</u>: </b>I think there is a two out of three chance that one or more countries will exit the Eurozone in 2012. Why would this be a big deal? First, because it will be a gigantic economic mess that will certainly put us in a deep recession, and will likely involve the failure of one or more European banks, and one or more US banks. Back in crisis mode, we will have a chance to undertake the significant financial restructuring we failed to do in Round 1. We can finally hold one or more banks accountable for their past/ present malfeasance and mismanagement, and make it clear to markets that TBTF is over. Also, believe a second crisis could finally give us a chance to provide significant support to underwater homeowners on a scale that would make a huge economic difference.<br />
<br />
The second reason a Eurozone breakup or restructuring would be a big deal is that this could put a marlinspike straight through the heart of the IMF/EU/ECB neoliberal orthodoxy that austerity works to generate growth and reduce deficits/debt. The world is simply dying economically under the weight of this bad economic thinking, negatively affecting the US and the UK, in addition to the Eurozone.<br />
<br />
<b>Austerity does not work. Period. Austerity only begets austerity, not growth.</b> A Eurozone failure will give us a chance to reexamine the disastrous austerity/no deficits neoliberal agenda.<br />
<br />
And finally, the German-French dominance of the rest of Europe through a kind of economic terrorism, forcing "technocratic governments" into place in Greece and Italy, moving economic decision making in key parts to a non-democratic Brussells' center, punishing the "lazy and irresponsible South Europe" in a kind of medieval morality play, goes completely against the upwelling of freedom and individual dignity that seems to be a deep current elsewhere in the world (Occupy protests, the Arab Spring, the democratic loosening in Myanmar, the new protests in Wukan, China, etc.).<br />
<br />
I don't much like seeming to advocate for pain. A very good friend recently told me: "Watch out what you wish for." And I cannot claim I am indifferent to this scenario. If the ECB steps up and commits to underwriting sovereign European bonds, the crisis will most likely pass and I will feel an opportunity will have been lost to clean up our act and readjust certain key parts of our economic perspective: we must become Keynesians again, or we will sink into depression.<br />
<br />
<b>My forecast (mentioned above): 2 out of 3 chances that a Eurozone breakup/restructuring will happen in 2012.</b><br />
<b><br /></b><br />
<b> * <u>Republican Party</u>: </b>I think there is a 50% chance that there will be a significant third party, conservative candidate if Romney wins the Republican nomination, and, if this does happen, a 50% chance that this will lead to an effective fracturing of the Republican Party. In other words: Romney has to get the nomination (Intrade puts the odds of this at 80%). Then there is a 50% chance of a 3rd Party run, and a further 50% chance of this leading to a true rupture in the GOP. Multiplying 80% x 50% x 50% gives us an overall (from my viewpoint) chance of a GOP rupture at 20%, or <b>one chance out of five</b>, not very high odds, but still a possibility.<br />
<br />
Why would this be important? In my opinion, America needs two moderate parties (center-left and center-right) competing aggressively against each other. I believe we have become almost incapacitated as a country due to the hard right movement of the GOP. The parties appear incapable of working together to address America's problems. There actually is some overlap in agendas on domestic policy (tax reform, spending/deficit/debt reduction); but when it looks like some Grand Bargain may be reached (the Obama-Boehner talks during the debt ceiling fiasco), the deals mostly blow up, because conservatives don't want to give Obama a win (even if their side gets a win too).<br />
<br />
If there is no 3rd Party, and Obama manages to win in November (beating Romney), I believe conservative commentators will simply say that Romney was not a proper conservative. But if the Party has a true rupture, continuing after the election (and Obama's big win), it is possible (though not certain) that Republicans will say we need to move the Party back to the center, and a new moderate GOP will begin to emerge.<br />
<br />
<b>My forecast: One in five chance.</b><br />
<b><br /></b><br />
<b> * <u>Iran</u>: </b>I do not think Obama will initiate a strike on Iran, nor will he allow Israel to strike on their own. There will be a lot of pressure on both Obama and Israel to launch such an attack, but I believe the voices for attack will not win the day. This would change completely, in my opinion, were Iran to try to blockade the Straits of Hormuz. If this happens (very low probability), we will attack shipping, air, and command/control assets to break the blockade, but do not feel we would move inland to bomb the country's nuclear facilities. Conservatives would be screaming for it, but I feel Obama's position would be the following: <b>Short of all out war, the only way to get Iran to not go weapons nuclear is to have them make that decision themselves. If we bomb their facilities, we are just delaying the program, not ending it. They must make their own decision to disavow nuclear weapons, concluding that it is in their own interests. </b><br />
<b><br /></b><br />
Why do I think there is a chance they will make that decision in 2012? First, I am assuming Iraq holds together in some sovereign, more or less manageable political form. If Iraq collapses, and Iran is able to take effective control through al Sadr, then the hegemonic ambitions of Iran will be hard to stop and they would most likely press ahead for nuclear weapons. Second, I am also assuming Bashar al Assad will be thrown out in Syria, and some form of national unity Sunni political party will take charge, effectively ending Iran's powerful influence in Syria. Over time, this would weaken Lebanon's Hezbollah, which has counted on Syria, as well as Iran for support. This will probably cause Hezbollah's leader, Hassan Nasrallah, to moderate his Shiite group somewhat; for they now will be going solo in a sea of Sunnis.<br />
<br />
With Iraq holding on, Syria gone, Hezbollah isolated, and sanctions clearly starting to bite, Shiite Iran may decide it's time to let go of its regional hegemonic ambitions, and join up with the evolving Middle East (and beyond), before the Arab Spring becomes the Persian Spring. And my guess: if there is a second Green Revolution, this one will not end peacefully, after the examples of Libya and then Syria. Iranian leaders may want to head this freedom energy off at the pass. Making a deal with the West, removing the sanctions, and rebuilding the economy may soon appear to be a better route to regime maintenance than going nuclear,<br />
<br />
<b>My forecast: one in three chance.</b><br />
<b><br /></b><br />
<b> * <u>Israel</u>: </b>We have learned one thing about Israeli-Palestinian peace negotiations: the US will never be able to force Israel to accept a peace agreement, or a two state solution that they do not want. So what's going on that might encourage Israel to actively seek an agreement? First of all, the current and potential changes happening in Egypt. The coming to power (eventually) of an Islamist coalition, at some point (I believe) moving into a true power-sharing arrangement with the Egyptian military, must give Israeli leaders great pause.<br />
<br />
Second, if Assad is thrown out of Syria, and a Sunni coalition takes over, Israel has a second potential Islamist state on one of its borders. It would seem like it might be better to make peace and agree to the two state solution, to take the Palestinian canker sore off the region's radar. I will be accused of naiveté; but I have always believed that when the Israelis decide peace (and a two state solution) is desirable, they will find a way to make that peace secure and safe for Israel's future, backed by US guarantees.<br />
<br />
Nevertheless, I do not think Israel will finally move towards peace and a two state program until Iran is credibly out of the nuclear weapons business. So if Iran "tips", following Syria's "tip", then I think there is a fair chance for peace.<br />
<br />
<b>My forecast: one in six chance.</b><br />
<b><br /></b><br />
It is possible none of these "tipping points" will happen in 2012, though my bet is that at least one will. So let's wait and see. 2012 promises to be an eventful, potentially history-changing year.Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com1tag:blogger.com,1999:blog-7622582335639067704.post-42584175169353947532012-01-02T13:15:00.001-06:002012-01-02T13:17:10.446-06:00What to Remember When Waking<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivyHtm41-5SmJF-7x7IEM35EoxSqaxz1Mu0hG0PFyEEi6kUN9vp9g7r6udhTGQCNgeAMHzdEKafJ3ZrFn6DW5V1kMUfrBylZ3RYtppy9lSCai69y0oL9TjlR91xV9MnGlsPTy2K8Cf4zDU/s1600/animals_in_the_snow_2_-300x199.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="424" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivyHtm41-5SmJF-7x7IEM35EoxSqaxz1Mu0hG0PFyEEi6kUN9vp9g7r6udhTGQCNgeAMHzdEKafJ3ZrFn6DW5V1kMUfrBylZ3RYtppy9lSCai69y0oL9TjlR91xV9MnGlsPTy2K8Cf4zDU/s640/animals_in_the_snow_2_-300x199.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">From nakedcapitalism.com<br />
<br />
<span class="Apple-style-span" style="font-size: x-small;"></span><br />
<div align="center">
<span class="Apple-style-span" style="font-size: x-small;"><span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;"><b>WHAT TO REMEMBER WHEN WAKING</b></span></span></div>
<span class="Apple-style-span" style="font-size: x-small;">
<div align="center">
<br />
<span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">In that first<br />hardly noticed<br />moment<br />in which you wake,<br />coming back<br />to this life<br />from the other<br />more secret,<br />moveable<br />and frighteningly<br />honest<br />world<br />where everything<br />began,<br />there is a small<br />opening<br />into the new day<br />which closes<br />the moment<br />you begin<br />your plans.<br /><br />What you can plan<br />is too small<br />for you to live.<br /><br />What you can live<br />wholeheartedly<br />will make plans<br />enough<br />for the vitality<br />hidden in your sleep.</span></div>
<div align="center">
<span style="font-size: x-small;"></span><br />
<a name='more'></a><span style="font-size: x-small;"><br /><br /><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">To be human<br />is to become visible<br />while carrying<br />what is hidden<br />as a gift to others.<br /><br />To remember<br />the other world<br />in this world<br />is to live in your<br />true inheritance.<br /><br />You are not<br />a troubled guest<br />on this earth,<br />you are not<br />an accident<br />amidst other accidents<br />you were invited<br />from another and greater<br />night<br />than the one<br />from which<br />you have just emerged.<br /><br />Now, looking through<br />the slanting light<br />of the morning<br />window toward<br />the mountain<br />presence<br />of everything<br />that can be,<br />what urgency<br />calls you to your<br />one love? What shape<br />waits in the seed<br />of you to grow<br />and spread<br />its branches<br />against a future sky?<br /><br />Is it waiting<br />in the fertile sea?<br />In the trees<br />beyond the house?<br />In the life<br />you can imagine<br />for yourself?<br />In the open<br />and lovely<br />white page<br />on the waiting desk?<br /><br /><b>~ David Whyte ~</b></span></span></div>
<div align="center">
</div>
<div align="center">
<span style="font-family: Times, 'Times New Roman', serif; font-size: xx-small;"><b>(<em>The House of Belonging</em>)</b></span></div>
<div align="center">
</div>
</span></td></tr>
</tbody></table>
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-59706872159618427632011-12-31T16:25:00.002-06:002011-12-31T16:29:07.938-06:00A Fresh and Wild PerspectiveThis is a 25 minute piece with Slovenian born philosopher, Slavoj Zizek<br />
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.<br />
<br />
<object id="flashObj" width="480" height="270" classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=9,0,47,0"><param name="movie" value="http://c.brightcove.com/services/viewer/federated_f9?isVid=1&isUI=1" /><param name="bgcolor" value="#FFFFFF" /><param name="flashVars" value="videoId=1247618890001&linkBaseURL=http%3A%2F%2Fenglish.aljazeera.net%2Fprogrammes%2Ftalktojazeera%2F2011%2F10%2F2011102813360731764.html&playerID=664965303001&playerKey=AQ~~,AAAAmtVJIFk~,TVGOQ5ZTwJZbyLu770YWZ_LE4OaoU5Nv&domain=embed&dynamicStreaming=true" /><param name="base" value="http://admin.brightcove.com" /><param name="seamlesstabbing" value="false" /><param name="allowFullScreen" value="true" /><param name="swLiveConnect" value="true" /><param name="allowScriptAccess" value="always" /><embed src="http://c.brightcove.com/services/viewer/federated_f9?isVid=1&isUI=1" bgcolor="#FFFFFF" flashVars="videoId=1247618890001&linkBaseURL=http%3A%2F%2Fenglish.aljazeera.net%2Fprogrammes%2Ftalktojazeera%2F2011%2F10%2F2011102813360731764.html&playerID=664965303001&playerKey=AQ~~,AAAAmtVJIFk~,TVGOQ5ZTwJZbyLu770YWZ_LE4OaoU5Nv&domain=embed&dynamicStreaming=true" base="http://admin.brightcove.com" name="flashObj" width="480" height="270" seamlesstabbing="false" type="application/x-shockwave-flash" allowFullScreen="true" allowScriptAccess="always" swLiveConnect="true" pluginspage="http://www.macromedia.com/shockwave/download/index.cgi?P1_Prod_Version=ShockwaveFlash"></embed></object><br />
<br />
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-76413811356728007032011-12-31T16:13:00.001-06:002011-12-31T16:33:55.281-06:00Another MiracleA 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."<br />
<br />
<iframe src="http://player.vimeo.com/video/31158841?title=0&byline=0&portrait=0" width="400" height="320" frameborder="0" webkitAllowFullScreen mozallowfullscreen allowFullScreen></iframe><p><a href="http://vimeo.com/31158841">Murmuration</a> from <a href="http://vimeo.com/user3069761">Sophie Windsor Clive</a> on <a href="http://vimeo.com">Vimeo</a>.</p><br />
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-4053998419874886982011-12-31T15:55:00.002-06:002011-12-31T15:55:35.436-06:00Some Questions Must Be Answered<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1dXcnIsuHH2DvC9ZvheuAtN7gbqBcDYRcm6tuiFfk_M1hQiSmYg-RaV_zfK8-Yp8mmXKxTgfPHk4STA2Qcjv5bLzsv4_UVHEexgGwaWwsItZgd9K4UB3P01GGlEIQ7pdM2cWkR6tUQ8N0/s1600/Screen-shot-2011-12-31-at-1.19.58-AM.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="478" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1dXcnIsuHH2DvC9ZvheuAtN7gbqBcDYRcm6tuiFfk_M1hQiSmYg-RaV_zfK8-Yp8mmXKxTgfPHk4STA2Qcjv5bLzsv4_UVHEexgGwaWwsItZgd9K4UB3P01GGlEIQ7pdM2cWkR6tUQ8N0/s640/Screen-shot-2011-12-31-at-1.19.58-AM.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">From nakedcapitalism.com<br /><br /><div align="center">
<span style="font-family: Times, 'Times New Roman', serif; font-size: small;"><b>SOMETIMES</b></span></div>
<div style="font-size: medium;">
</div>
<div align="center" style="font-size: medium;">
<span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">Sometimes<br />if you move carefully<br />through the forest</span></div>
<div style="font-size: medium;">
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></div>
<div align="center" style="font-size: medium;">
<span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">breathing<br />like the ones<br />in the old stories</span></div>
<div style="font-size: medium;">
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></div>
<div align="center" style="font-size: medium;">
<span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">who could cross<br />a shimmering bed of dry leaves<br />without a sound,</span></div>
<div style="font-size: medium;">
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></div>
<div align="center" style="font-size: medium;">
<span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">you come<br />to a place<br />whose only task</span></div>
<div style="font-size: medium;">
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></div>
<div align="center" style="font-size: medium;">
<span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">is to trouble you<br />with tiny<br />but frightening requests</span></div>
<div style="font-size: medium;">
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></div>
<div align="center" style="font-size: medium;">
<span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">conceived out of nowhere<br />but in this place<br />beginning to lead everywhere.</span></div>
<div style="font-size: medium;">
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></div>
<div align="center" style="font-size: medium;">
<span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">Requests to stop what<br />you are doing right now,<br />and</span></div>
<div style="font-size: medium;">
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></div>
<div align="center" style="font-size: medium;">
<span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">to stop what you<br />are becoming<br />while you do it,</span></div>
<div style="font-size: medium;">
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></div>
<div align="center" style="font-size: medium;">
<span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">questions<br />that can make<br />or unmake<br />a life,</span></div>
<div style="font-size: medium;">
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></div>
<div align="center" style="font-size: medium;">
<span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">questions<br />that have patiently<br />waited for you,</span></div>
<div style="font-size: medium;">
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></div>
<div align="center" style="font-size: medium;">
<span style="font-family: Times, 'Times New Roman', serif; font-size: x-small;">questions<br />that have no right<br />to go away.</span></div>
<div style="font-size: medium;">
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"> </span></div>
<div align="center">
<span style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: small;"><b>~ David Whyte ~</b></span></span></div>
<div align="center" style="font-size: medium;">
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span style="font-size: x-small;"></span> </span></div>
<div align="center">
<span style="font-family: Times, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-size: small;"><i>(Everything is Waiting for You)</i></span></span></div>
<div style="font-size: medium;">
</div>
<div align="center" style="font-size: medium;">
<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><span style="font-size: x-small;"></span> </span></div>
<div align="center" style="font-size: medium;">
</div>
</td></tr>
</tbody></table>
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-54339749983179026102011-12-25T17:20:00.002-06:002011-12-25T17:20:33.618-06:00Creation Charged: Two Poems and a Picture<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrqb-LJfTutAyElZj2GnudpkwWTqk9P21LazAIVulSxF35Z6W_aIK5YTRk3_c03Qe8wUUXXd7ENknbWJOvRxHCcVNlTQfaetXTQUblYADjUTH3L1kNMp2B2wz0JHDtjmMFt9JfYS07Veba/s1600/photo.JPG" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="494" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrqb-LJfTutAyElZj2GnudpkwWTqk9P21LazAIVulSxF35Z6W_aIK5YTRk3_c03Qe8wUUXXd7ENknbWJOvRxHCcVNlTQfaetXTQUblYADjUTH3L1kNMp2B2wz0JHDtjmMFt9JfYS07Veba/s640/photo.JPG" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>The Sower </i>Vincent van Gogh<br /><br />
<!--[if gte mso 9]><xml>
<o:OfficeDocumentSettings>
<o:AllowPNG/>
</o:OfficeDocumentSettings>
</xml><![endif]--><!--[if gte mso 9]><xml>
<w:WordDocument>
<w:Zoom>0</w:Zoom>
<w:TrackMoves>false</w:TrackMoves>
<w:TrackFormatting/>
<w:PunctuationKerning/>
<w:DrawingGridHorizontalSpacing>18 pt</w:DrawingGridHorizontalSpacing>
<w:DrawingGridVerticalSpacing>18 pt</w:DrawingGridVerticalSpacing>
<w:DisplayHorizontalDrawingGridEvery>0</w:DisplayHorizontalDrawingGridEvery>
<w:DisplayVerticalDrawingGridEvery>0</w:DisplayVerticalDrawingGridEvery>
<w:ValidateAgainstSchemas/>
<w:SaveIfXMLInvalid>false</w:SaveIfXMLInvalid>
<w:IgnoreMixedContent>false</w:IgnoreMixedContent>
<w:AlwaysShowPlaceholderText>false</w:AlwaysShowPlaceholderText>
<w:Compatibility>
<w:BreakWrappedTables/>
<w:DontGrowAutofit/>
<w:DontAutofitConstrainedTables/>
<w:DontVertAlignInTxbx/>
</w:Compatibility>
</w:WordDocument>
</xml><![endif]--><!--[if gte mso 9]><xml>
<w:LatentStyles DefLockedState="false" LatentStyleCount="276">
</w:LatentStyles>
</xml><![endif]-->
<!--[if gte mso 10]>
<style>
/* Style Definitions */
table.MsoNormalTable
{mso-style-name:"Table Normal";
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-parent:"";
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:12.0pt;
font-family:"Times New Roman";
mso-ascii-font-family:Cambria;
mso-ascii-theme-font:minor-latin;
mso-fareast-font-family:"Times New Roman";
mso-fareast-theme-font:minor-fareast;
mso-hansi-font-family:Cambria;
mso-hansi-theme-font:minor-latin;}
</style>
<![endif]-->
<!--StartFragment-->
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-size: 12.0pt;">God's Word is in all Creation<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">By Hildegard of
Bingen<o:p></o:p></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">No creature has meaning</span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">without the Word of God.</span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">God's Word is in all creation, </span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">visible and invisible.</span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">The Word is living, being,</span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">spirit, all verdant greening,</span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">all creativity.</span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">This Word flashes out in</span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">every creature.</span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">This is how the spirit is in</span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">the flesh—</span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">the Word is indivisible from God.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<o:p> </o:p><b style="mso-bidi-font-weight: normal;"><span style="font-size: 14.0pt; mso-bidi-font-size: 12.0pt;">God's Grandeur</span></b></div>
<!--[if gte mso 9]><xml>
<o:OfficeDocumentSettings>
<o:AllowPNG/>
</o:OfficeDocumentSettings>
</xml><![endif]--><!--[if gte mso 9]><xml>
<w:WordDocument>
<w:Zoom>0</w:Zoom>
<w:TrackMoves>false</w:TrackMoves>
<w:TrackFormatting/>
<w:PunctuationKerning/>
<w:DrawingGridHorizontalSpacing>18 pt</w:DrawingGridHorizontalSpacing>
<w:DrawingGridVerticalSpacing>18 pt</w:DrawingGridVerticalSpacing>
<w:DisplayHorizontalDrawingGridEvery>0</w:DisplayHorizontalDrawingGridEvery>
<w:DisplayVerticalDrawingGridEvery>0</w:DisplayVerticalDrawingGridEvery>
<w:ValidateAgainstSchemas/>
<w:SaveIfXMLInvalid>false</w:SaveIfXMLInvalid>
<w:IgnoreMixedContent>false</w:IgnoreMixedContent>
<w:AlwaysShowPlaceholderText>false</w:AlwaysShowPlaceholderText>
<w:Compatibility>
<w:BreakWrappedTables/>
<w:DontGrowAutofit/>
<w:DontAutofitConstrainedTables/>
<w:DontVertAlignInTxbx/>
</w:Compatibility>
</w:WordDocument>
</xml><![endif]--><!--[if gte mso 9]><xml>
<w:LatentStyles DefLockedState="false" LatentStyleCount="276">
</w:LatentStyles>
</xml><![endif]-->
<!--[if gte mso 10]>
<style>
/* Style Definitions */
table.MsoNormalTable
{mso-style-name:"Table Normal";
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-parent:"";
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:12.0pt;
font-family:"Times New Roman";
mso-ascii-font-family:Cambria;
mso-ascii-theme-font:minor-latin;
mso-fareast-font-family:"Times New Roman";
mso-fareast-theme-font:minor-fareast;
mso-hansi-font-family:Cambria;
mso-hansi-theme-font:minor-latin;}
</style>
<![endif]-->
<!--StartFragment-->
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b style="mso-bidi-font-weight: normal;">By Gerard Manley
Hopkins<o:p></o:p></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">THE WORLD is charged with the grandeur of God.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">It will flame out, like shining from shook foil;<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">It gathers to a greatness, like the ooze of oil Crushed. </span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">Why do men then now not reck his rod? </span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">Generations have trod,
have trod, have trod;<span style="mso-spacerun: yes;">
</span></span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">And all is seared with trade; bleared, smeared with
toil;<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">And wears man’s smudge and shares man’s smell: </span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">the soil Is bare now, nor can foot feel, being shod.<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">And for all this, nature is never spent;<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">There lives the dearest freshness deep down things;<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">And though the last lights off the black West went<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">Oh, morning, at the brown brink eastward, springs</span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">— Because the Holy Ghost over the bent<span style="mso-spacerun: yes;"> </span></span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: small;">World broods with warm breast and with ah! bright wings.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<br /></div>
<!--EndFragment-->
<!--EndFragment--></td></tr>
</tbody></table>
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-64627918847321140342011-12-25T15:09:00.003-06:002011-12-25T15:09:28.570-06:00Joy ExpressedLiz 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.<br />
<br />
<iframe allowfullscreen="" frameborder="0" height="360" src="http://www.youtube.com/embed/z36mTrnHwrM" width="480"></iframe><br />
<br />
<br />
<br />
<a name='more'></a><br /><br />
<br />
<br />
I went to the place He was dining to pour my life on my love<br />
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
I wrapped my hair around Him and the fragrance drifted up </div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
I didn’t even notice when the beast began to judge </div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
His love is out of this world and I’m totally undone </div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
He’s alive, He’s alive and I’ve only just begun to worship Him! </div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<br /></div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
I went to the place where they laid Him to look upon His face </div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
Angels in garments blazing were standing in His place </div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
I asked them, “Where’s my Lover? Have you hidden Him from me? </div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
Cause I have so much more to give to The One, Who set me free."</div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<br /></div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
I went to the place he lingers and I follow Him in my song </div>
I feel His breath on my fingers as I lift Him up<br />
I know this is just the beginning of this wonderful wave<br />
We are riding on the ribbon of never-ending praise.<br />
<br />
CHORUS:<br />
He’s alive, He’s alive and we’ve only just begun to worship Him!<br />
<br />
BRIDGE:<br />
Break us open _we’ve got so much for You!<br />
Won’t You break us open we want to pour it all on You!<br />
Break us open, break us open, break us open!<br />
Break us open, break us open, break us open!<br />
You’re alive, You’re alive and we’ve only just begun to worship You!..<br />
<br />
© 2007 Suzy Yaraei/Paulette Wooten<br />
HE’S ALIVE<br />
<br />
<br />
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-55788508592888488452011-12-24T19:32:00.002-06:002011-12-24T19:40:42.572-06:00The Annunciation<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgXbGaVeQx8DG9cf4eBrNEuQ7Vi2x1aC1dxEoVHhTBZ7Lurtehz_bF_wqx-oATHtOVyZWQ608FLaN8-a4OcKLFxJdMkrxqCKxm0Q0Yf7ry8OJe1KagWwX2kZ33CJwiAMssiuuxdjp_2hl7J/s1600/121_Annunciation02.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgXbGaVeQx8DG9cf4eBrNEuQ7Vi2x1aC1dxEoVHhTBZ7Lurtehz_bF_wqx-oATHtOVyZWQ608FLaN8-a4OcKLFxJdMkrxqCKxm0Q0Yf7ry8OJe1KagWwX2kZ33CJwiAMssiuuxdjp_2hl7J/s640/121_Annunciation02.jpg" width="544" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>The Annunciation </i> Fra Angelico</td></tr>
</tbody></table>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div style="text-align: center;">
<span class="Apple-style-span" style="font-size: large;"><b><u>The Annunciation</u></b></span></div>
<div style="text-align: center;">
<b>By Denise Levertov</b></div>
<div style="text-align: center;">
<br /></div>
<br />
<div style="text-align: center;">
We know the scene: the room, variously furnished,</div>
<div style="text-align: center;">
almost always a lectern, a book; always</div>
<div style="text-align: center;">
the tall lily.</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
Arrived on solemn grandeur of great wings,</div>
<div style="text-align: center;">
the angelic ambassador, standing or hovering,</div>
<div style="text-align: center;">
whom she acknowledges, a guest.</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
But we are told of meek obedience. No one mentions</div>
<div style="text-align: center;">
courage.</div>
<div style="text-align: center;">
The engendering Spirit</div>
<div style="text-align: center;">
did not enter her without consent. God waited.</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
She was free</div>
<div style="text-align: center;">
to accept or refuse, choice</div>
<div style="text-align: center;">
integral to humanness.</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
Aren't there annunciations</div>
<div style="text-align: center;">
of one sort or another in most lives?</div>
<div style="text-align: center;">
Some unwillingly undertake great destinies,</div>
<div style="text-align: center;">
enact them in sullen pride,</div>
<div style="text-align: center;">
uncomprehending.</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
More often those moments</div>
<div style="text-align: center;">
when roads of light and storm</div>
<div style="text-align: center;">
open from darkness in a man or woman,</div>
<div style="text-align: center;">
are turned away from</div>
<div style="text-align: center;">
in dread, in a wave of weakness, in despair</div>
<div style="text-align: center;">
and with relief.</div>
<div style="text-align: center;">
Ordinary lives continue.</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
God does not smite them.</div>
<div style="text-align: center;">
But the gates close, the pathway vanishes..</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
She had been a child who played, ate, slept</div>
<div style="text-align: center;">
like any other child - but unlike others,</div>
<div style="text-align: center;">
wept only for pity, laughed</div>
<div style="text-align: center;">
in joy not triumph.</div>
<div style="text-align: center;">
Compassion and intelligence</div>
<div style="text-align: center;">
fused in her, indivisible.</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
Called to a destiny more momentous</div>
<div style="text-align: center;">
than any in all of Time,</div>
<div style="text-align: center;">
she did not quail,</div>
<div style="text-align: center;">
only asked</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
a simple, "How can this be?"</div>
<div style="text-align: center;">
and gravely, courteously,</div>
<div style="text-align: center;">
took to heart the angel's reply,</div>
<div style="text-align: center;">
perceiving instantly</div>
<div style="text-align: center;">
the astounding ministry she was offered:</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
to bear in her womb</div>
<div style="text-align: center;">
Infinite weight and lightness; to carry</div>
<div style="text-align: center;">
in hidden, finite inwardness,</div>
<div style="text-align: center;">
nine months of Eternity; to contain</div>
<div style="text-align: center;">
in slender vase of being,</div>
<div style="text-align: center;">
the sum of power -</div>
<div style="text-align: center;">
in narrow flesh,</div>
<div style="text-align: center;">
the sum of light.</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
Then bring to birth,</div>
<div style="text-align: center;">
push out into air, a Man-child</div>
<div style="text-align: center;">
needing, like any other,</div>
<div style="text-align: center;">
milk and love -</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
but who was God.</div>
<div style="text-align: center;">
<br /></div>Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-45550571450203823852011-12-24T12:38:00.002-06:002011-12-24T13:02:29.254-06:00Are We Broke?<br />
<br />
No. But it's amazing what per cent of the country thinks we are.<br />
<br />
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.<br />
<br />
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.<br />
<br />
<br />
<a name='more'></a><br />
<br />
<br />
We used to back our currency with gold. $35 to the ounce. But this ended up being too restrictive. We generally import more than we export, which means we need our trading partners to hold/invest in dollars. If they get skittish, and try to pull out of dollars, we either have to pony up some of our gold, or raise interest rates to attract this money to stay invested in dollars, thus distorting the rest of the economy.<br />
<br />
So in 1971, President Nixon closed the gold window, and our currency has been "free floating" ever since. Hard money believers think the US began to fall apart economically from that moment on. We were building our enterprises, our country, in fact, on nothing but air, nothing real. Those on the other side of this debate (most economists) say that the full faith and credit of the US Government is, in fact, something substantial, and just as valuable as gold.<br />
<br />
But we seem to have carried many of the gold standard habits and beliefs into this time of our freely floating currency. Under the gold peg, we always had to watch how much we borrowed, especially from abroad through our current account deficit. In fact, we had a very specific amount of money, and that was the amount of gold in Fort Knox, multiplied by the conversion factor of $35 to the ounce. Now we have unlimited amounts, but we still act as if we are tightly constrained.<br />
<br />
What are those perceived constraints and why do I argue that they don't apply to our free-floating, fiat (I.e., issued by "fiat", when we want and in the quantities we want, not subject to market or reserve constraints) currency?<br />
<br />
* <b>Printing money not backed by something (if not gold, then tax receipts), is a sham, an illusion, even a Ponzi scheme.</b> Our government literally does create money out of thin air, or quite specifically, by a few simple computer keystrokes. Treasury does this (not the Fed) when it spends money ( the Fed sets interest rates by buying and selling notes and bonds- they aren't spending new money). Taxes are not necessary. Treasury does not check the tax receipt balance when they spend. They spend when the approved budget and other statutory agreements call for them to spend. There is no constraint on their doing so. Is this money they create only air, in other words wholly insubstantial? Were your wedding vows insubstantial? They are only words, even if they carry legal significance according to the law. Of course your words have substance: they are backed by your full faith and integrity. They, like the Church Jesus founded on his confidence in one man, Peter, are founded on a rock, even if that rock is not gold. As we know too well, wedding vows can be broken; but that does not deny their substance. And the US has never broken it's vows, and in my opinion, never will.<br />
<br />
*<b> Spending money we don't have (i.e., government spending in excess of receipts, or deficits) will lead to inflation, currency debasement, US sovereign default, then hyperinflation and the destruction of the economy.</b> It just isn't true. The best example is Japan, which has deficit spent in large numbers for twenty years, with very low inflation and rock bottom interest rates, even as public debt/GDP ratios passed 200%, double the US level. Inflation hawks say "Just wait. The Japanese population is aging. Social spending will rise dramatically, while personal savings will fall, leading to the Japanese no longer having enough money to buy all their government's bonds (JGBs'- Japanese Government Bonds), hence JGB yields on, say, 10 year bonds, will skyrocket up from their long term 1% levels." If you believe that the only reason JGBs' carry low yields is that they are all, always snapped up by Japanese savers, and not by the fact that the Japanese yen, like the dollar, is a fiat currency in unlimited supply - then go ahead and bet against JGBs', but be careful. Most of the world's bond investors will be betting against you.<br />
<br />
So why aren't deficits inflationary. You are adding new money to an existing system, leading to more money chasing the same quantity of goods, leading to higher prices. And yes, if the quantity of goods did not expand, you would have inflation. So, yes, deficits can be inflationary, if the economy is operating at or near full capacity. If it is not, like Japan since 1990, more spending will call out more production, hence no increase in inflation.<br />
<br />
But what if inflation started again, like the 70s' - couldn't we have hyperinflation like Germany with the Weimar Republic in the 1920s'? I will answer a simple no, even though there are very remote possibilities that this could happen, but we would have to match what happened in Weimar: they were saddled with huge war reparations, which they had to pay in a foreign currency (pounds, dollars), and their currency collapsed, as they flooded the market with marks to buy dollars and pounds. Additionally, half of the country's productive capacity had been taken offline when workers in the Ruhr went on strike. So if the US were to lose a large nuclear war and be saddled with gigantic war reparations, hyperinflation might happen here, but the odds are infinitesimal.<br />
<br />
And please don't compare the US to Zimbabwe. There, the revolution's winners expropriated half the country's productive capacity to reward fellow freedom fighters, with predictable inflationary results. So yes, deficit spending can be dangerous, when the economy is at, or way above its productive capacity limits; but that scenario fits neither Japan since 1990, nor the US now.<br />
<br />
How about currency debasement? Since 1971 and the closing of the gold window, there has been a downward adjustment of the dollar, as well as a huge upward valuation of gold. The dollar was clearly overvalued and the big adjustment has been made. If you look at movements in the last 10 years, the dollar has moved up and down, with some downward bias. But nothing dramatic. We are, after all, a significant and continuing net importer. The pressure of a current account deficit will always be downward on the currency. But this has been offset by capital inflows, since Treasuries are consistently perceived as a safe haven in the current asset valuation storm. Think what it would mean if the dollar were to fall rapidly and continually: our product prices would, comparatively, look better and better; we would take more and more global market share; other countries would be frantic and their Central Banks would buy dollars like crazy, reversing the dollar's downward slide. Our currency will not collapse, unless the world does, and by then, we're in Never-Neverland anyway.<br />
<br />
But aren't we burdening our kids with debts they can't pay? If we have $15 trillion of public debt now, don't we need to add the $40-65 trillion of unfunded Social Security, Medicare, and other safety net social insurance liabilities? Doesn't this prove we're broke?<br />
<br />
The answer again is no. We have those commitments to our people now, and we are keeping them. The Petersen Institute has brilliantly brought the "unfunded liability" issue into public awareness, frightening almost everyone in the process. We have had those "unfunded liabilities" , more or less, since the Social Security and Medicare programs were started. But wait, you will say, these programs have been "funded" by individual contributions through the Payroll tax system; and we are just now running out of money because of the aging of the population and the uncontrolled rise in medical costs. At one level, these comments have validity: the number of workers paying in to the various social security funds is falling in relation to the number of seniors needing support; and medical costs have been growing much faster than the rate of inflation.<br />
<br />
<b>But we will not and cannot run out of money. And the individual pay-ins have never been necessary to fund the system, just like taxes are not necessary to fund government spending. The incoming money has gone into the General Revenue pot, to be spent, or, more exactly, offset with debit strokes on Treasury's keyboard, versus the credit strokes used to register these funds' arrival. Yes, Virginia, there truly is a Santa Claus: your Mom and Dad, Granny and Grampy will continue to get Social Security and Medicare, even when their storehouse fund accounts appear drained, because the country has made a commitment to its people that these social insurance payments will be made, and they will be, BECAUSE THEY ARE BACKED BY THE FULL FAITH AND CREDIT OF THE UNITED STATES.</b><br />
<br />
Yes, we do need to find a way to rein in medical costs. Despite what you may read in the press, this is what the Affordable Care Act undertakes to do. If we don't control healthcare costs, they will eat up a larger and larger percent of the GDP, potentially crowding out other necessary and productive spending.<br />
<br />
So what about our overall public debt? If it keeps growing, won't it become an ever larger percentage of GDP, thereby causing us to pay more in debt service as a percent of GDP? The answer, perhaps surprisingly, is not necessarily. Changes in the public debt to GDP ratio depend on three variables: annual deficit percents, real interest rates, and real GDP growth rates. If we achieve real growth rates of 2%, a real interest rate of -1%, we can have a 3%, or $450 billion deficit without growing the Debt/GDP ratio at all.<br />
<br />
So yes, Virginia, there is a Santa Claus. And no, we are not broke. Nor will we be.<br />
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-79484416793996548182011-12-22T16:27:00.001-06:002011-12-24T12:59:35.194-06:002012: My Questions, Issues and HopesI 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:<br />
<br />
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.<br />
<br />
<br />
<a name='more'></a><br />
<br />
<br />
2. No one in power seems to understand macroeconomics. There is an infatuation with austerity and the public debt crisis. We hear repeated statements that the US is broke. Not true. Not even remotely true. What are the central bad assumptions:<br />
<br />
a. Deficits are bad.<br />
b. Balanced budgets are good, surpluses even better.<br />
c. Public debt strangles the economy, and must be paid down or eliminated.<br />
d. Failure to reduce public debt unfairly burdens our children and grandchildren.<br />
e. There is a limit to how high the public debt/GDP can go (Rogoff and Reinhart - 60%)<br />
f. Out of control deficits and debt ratios will lead to the US some day being shut out of the credit markets, like Greece, Ireland, Portugal, etc.<br />
g. Deficits will push up interest rates.<br />
h. Government spending does not create jobs or add to GDP.<br />
i. If we don't control spending and debt levels, bond markets/vigilantes will attack us and drive rates up to unmanageable levels.<br />
j. The Fed controls the money supply (M1, M2).<br />
k. Banks lend out of reserves provided by the Fed (bank money multiplier).<br />
l. The Government needs taxes to fund spending.<br />
m. Treasury needs to sell public debt to fund spending.<br />
n. Issuing public debt reduces the inflation risk caused by deficits.<br />
o. If we don't get spending under control, we face the risks of inflation, currency debasement, and hyperinflation.<br />
p. Our current low interest rates on public debt are an aberration.<br />
q. China has us over a barrel because they own so much of our debt.<br />
<br />
All of these statements are either wrong in toto, or wrong in part. Yet they are almost all taught in college macroeconomics. And they form the essential way most economists, almost all pundits, and both political parties view the economic world. <b>Quite simply, everyone is wrong. We are deciding policy based on a host of bad assumptions. </b>I will spend a lot of blog time presenting the case for macroeconomics that work, based on MMT (Modern Monetary Theory). Sometimes dense stuff; but it's worth working through, if it helps us to see how much of our public discourse is based on faulty economics.<br />
<br />
<br />
3. Republicans have overreached. Much of their program is outside the mainstream. Specifically: converting Medicare to a defined benefit (versus a defined contribution) program; privatizing Social Security; eliminating collective bargaining for public unions; resisting tax increases/promoting tax decreases for the wealthy/the top 1%; repealing Obamacare (country is split down the middle here); support for unlimited money in politics with limited disclosure requirements; resistance to a path to citizenship for illegals (again, the country is split); escalating war on reproductive rights with effort to define personhood at conception; resistance to Wall Street/bank regulation post crash. The country does not support this agenda. My hope: the 2012 campaign becomes a referendum on this agenda, not just a choice between Obama and the Republican nominee. If this happens, the Republicans could be defeated badly enough, that moderate Republicans will emerge to question this agenda, and move the Party back towards the center. Things to watch before November: Will Scott Walker be recalled as Governor of Wisconsin (if so, this will be only the third time in history)? Will the Supreme Court uphold the individual mandate and thus validate the legality of Obamacare? Does Occupy Wall Street stay alive, and become stronger in the Spring, tending to validate the President's message given in his Ossawatomie speech? I hope all three things happen, which could give powerful momentum to discrediting the conservative agenda.<br />
<br />
4. I hope 2012 is the year when we begin to talk seriously about housing policy from two perspectives: holding Wall Street, banks, and bank servicers accountable for the fraud they have perpetrated on homeowners, investors, the US land records system, and the taxpayer; and eliminating unpayable home mortgage debt. On the first point, Treasury has been absolutely asleep at the switch in terms of conducting real loan file and investment deal analysis, but it looks like some aggressive states attorneys are beginning to fill the gaps ( Schneiderman in New York; Biden in Delaware; Coakley in Massachusetts; Masto in Nevada; and Harris in California.) By the end of 2012, there will be some very serious legal inroads made against the banks in these states. Additionally, the SEC and the FHFA are moving against the banks at the federal level. On the accountability level, I am becoming somewhat more hopeful. As to mortgage debt forgiveness, the Administration has been extremely timid; moral hazard/how can we have a solution that just helps those who got in trouble, offering no reward for those who stayed current. But the real reason, I suspect, is that Treasury doesn't want to pound the banks' balance sheets. But it's time to move forward. Fully 25% of mortgages are underwater, and another 10% are close to being underwater. That's almost 18 million mortgages. To make up some numbers to look at scale: a $50,000 mortgage forgiveness on 18 million mortgages would total $900 billion. This would potentially bankrupt the big banks, which I think is necessary to avoid a lost decade like Japan, which refused to recapitalize its banks in the early 1990s'. Such a move would go a long way to repairing private household balance sheets, surely increasing families' willingness and ability to spend. Additionally, such a move would big time jump start the housing market, always a key in economic recovery.<br />
<br />
<br />
<br />
<br />
5. I truly hope Occupy Wall Street is just getting started. We need a powerful restatement of the ethical underpinnings of the American dream: We are not only a nation of individuals seeking to maximize our personal success; we are a nation of community, contribution, and shared sacrifice. Any individual or group of individuals that takes hold of the economic reins of power, and uses this position to advance only their own, and not the community's interests, needs to be exposed and called to account. We must serve more than our personal advancement; we must be in the Nation's service. We must work tirelessly to see that everyone gets a"fair deal, a fair shake and a fair shot". I can think of no better way to ensure this conversation is robustly engaged in this country, than to have Occupy continue to grow, in fact to flourish. Occupying the public space is an important part of the message, because it insists that all "public space" needs to be fully accessible, if not controlled by the 99%. There is an essential experiential element to Occupy that few, especially conservative pundits understand: you learn revolution by revolting; more softly, you learn true democracy by being and doing democracy - by being in the collective, democratic space of the General Assembly; by listening deeply to others in the Circles of Concern; by supporting broad, local listening through the amazing "Mic Check" means of spreading the word; and occasionally you need to face into the organized and assaulting opposition, in solidarity with your Band of Brothers and Sisters. Something new is a-birthing in America. It bears the aroma of Spirit. Watch this, and watch it as much as you can with clear and quiet eyes.<br />
<br />
6. 2012 may well be a year with considerable focus on the international scene. Not much will happen in a divided Congress. Energy, Climate Change, Immigration, and further moves in Healthcare must await the 2012 elections. Until then, only the international arena offers the possibility of substantial action. Egypt, with progress towards a representative government, while we adjust to dealing with a majority Islamist government. Will the military share power? It's not clear. But there can be progress. Syria, with a rejection of Assad probable. What will emerge? Most likely a Sunni majority government that breaks much of its ties to Iran, and to Hezbollah in Lebanon. Will it be civil war? Possibly and possibly not. What are the chances that the Sunni majority will break through the political morass and assert its will? Not extremely high; but not negligible. And what about Israel, potentially bordered on three sides by significantly Islamist states? I think Israel may possibly decide, perhaps in 2012, that they must finally go ahead and sign a two-state peace agreement with the Palestinians. And Iran - could this be the year they decide to come in from the cold? Syria under Sunni (Saudi) leadership would help. Israel making peace could help a lot. The odds aren't great; but, again, they are non-zero. And China? Is this the year where a possible hard economic landing shakes the world's fear and trembling in the face of the Asian Giant? And might this be the year when protests, fed by the new social media, begin to show up on some regular basis? Here the odds are reasonable, not just possible. Times they are a'changin. The air is full of calls for freedom, for individual dignity and valuation. No more can the dictator count on controlling the flow of information. And information brings power, and a desire for freedom. 2012 will be a year of transition and change, pushed further by what may start soon in Europe, carry into China and then burst on the scene as a worldwide recession, even depression. And it's hard to keep the people down and out when the economy is stumbling. Mark my words: by the time we get to November, many things will look different. How will it affect our elections? Hard to say, but the impacts will be real.<br />
<div>
<br /></div>
<br />
<br />
Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-84324286576134760082011-12-22T14:00:00.001-06:002011-12-22T14:25:42.112-06:00Behold, The Light!<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYqIpmv1MJAflH7BTnPjNRkxvJyaFSIxKcNZhbmBFryF0qLKIPby45OnjfbOEw6g7c5nVDsYOZneewgWDN13CIbJqsf5w-taUK8QmqONGlkn6iD9V6T7Kcsp_TeOmk3EOJt3Kw_CZWdZfO/s1600/neugeborene_geburt_christi_hi.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="526" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYqIpmv1MJAflH7BTnPjNRkxvJyaFSIxKcNZhbmBFryF0qLKIPby45OnjfbOEw6g7c5nVDsYOZneewgWDN13CIbJqsf5w-taUK8QmqONGlkn6iD9V6T7Kcsp_TeOmk3EOJt3Kw_CZWdZfO/s640/neugeborene_geburt_christi_hi.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Georges de la Tour, T<i>he Newborn</i><br />
<i><br /></i><br />
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;">The Light that will not be put out. What an amazing promise! When we believe the Light is truly inextinguishable, our next question is <i>"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?" </i>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 <b>know in our gut that this is so</b>, and we can then repeat after St. Julien of Norwich:</span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><i> "All things will be well. And all manner of things will be well."</i></span></div>
</td></tr>
</tbody></table>
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-7570392110226997072011-12-15T12:54:00.001-06:002011-12-25T15:12:07.270-06:00Crisis ForecastMichael 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!<br />
<br />
<br />
<a name='more'></a><br />
<br />
<br />
<script src="http://player.ooyala.com/player.js?height=360&embedCode=hmOHY0Mzr1tbaGuaZca6MBA6pMEzTyf3&deepLinkEmbedCode=hmOHY0Mzr1tbaGuaZca6MBA6pMEzTyf3&autoplay=1&width=640&video_pcode=oza2w6q8gX9WSkRx13bskffWIuyf">
</script>Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-25770635387992249712011-12-13T17:12:00.001-06:002011-12-13T17:23:45.374-06:00Balance Sheet RecessionsA 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.<br />
<br />
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<i> The Holy Grail of Maroeconomics: Lessons from Japan's Great Recession, </i>is that <b>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.</b> Let's take a look:<br />
<br />
First let's look at a comparison between our housing price collapse and Japan's:<br />
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAaTLklCcpKUuSy5C__7ZLbwFMgPnNA740JPYNrRFgSTZDCF92qCU5W3aAHGJxdf3meyPYq8CFL3_Wc9h8zljwqTeC71IpTKLkz8rfXRIy1u7Tn2rVdiQY5Nmf-lVO_IuPNB4ikLAwlmbV/s1600/Screen+Shot+2011-12-13+at+4.33.37+PM.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="412" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgAaTLklCcpKUuSy5C__7ZLbwFMgPnNA740JPYNrRFgSTZDCF92qCU5W3aAHGJxdf3meyPYq8CFL3_Wc9h8zljwqTeC71IpTKLkz8rfXRIy1u7Tn2rVdiQY5Nmf-lVO_IuPNB4ikLAwlmbV/s640/Screen+Shot+2011-12-13+at+4.33.37+PM.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">From <a href="http://www.paecon.net/PAEReview/issue58/Koo58.pdf">Richard Koo's recent paper</a><br />
<br />
<a name='more'></a><br />
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;">Obviously very similar patterns of asset collapse. And here is what followed:</span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi881DhgSomPiJqZ7ra9TM4xtl3AG_tThPYMyMtNRbxqtqB7VTZv8kUAdA6tNqUkLJCe17V3j3KX2AUQX8ZKcYdjja0972qq7PkD8gYlAcxxAcwfWEL_lYAXJg9ewy3aoMA6oBrU7xRI7y8/s1600/Screen+Shot+2011-12-13+at+4.39.30+PM.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="414" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi881DhgSomPiJqZ7ra9TM4xtl3AG_tThPYMyMtNRbxqtqB7VTZv8kUAdA6tNqUkLJCe17V3j3KX2AUQX8ZKcYdjja0972qq7PkD8gYlAcxxAcwfWEL_lYAXJg9ewy3aoMA6oBrU7xRI7y8/s640/Screen+Shot+2011-12-13+at+4.39.30+PM.png" width="640" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
From Richard Koo</div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;">Sixteen years of deleveraging. But because the government was most of the time willing to deficit spend, to replace the missing private demand, GDP still grew. Two times, in 1996 and 2001, the fiscal hawks won the day: spending was cut back, recessions ensued, and deficits actually increased.</span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-lPuN7wNxpwI_iDHnUNfixbbUJKHS2KE-l7BMpkqOmGYBhXGCueYjKBukKbIVgA-6wnd76NJlBQFzGY9ADdCBWueDwWanFg3b-bFdEikPRG_ZiXRcmDJY9llIKSQGrE7DUTH0BVHID98b/s1600/Screen+Shot+2011-12-13+at+4.48.14+PM.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-lPuN7wNxpwI_iDHnUNfixbbUJKHS2KE-l7BMpkqOmGYBhXGCueYjKBukKbIVgA-6wnd76NJlBQFzGY9ADdCBWueDwWanFg3b-bFdEikPRG_ZiXRcmDJY9llIKSQGrE7DUTH0BVHID98b/s640/Screen+Shot+2011-12-13+at+4.48.14+PM.png" width="640" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
From Richard Koo</div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;">You can see that the two times the GDP line turned down (before 2008) were in 1996 and 2001, when government spending was cut. But why isn't all this deficit spending inflationary? Take a look at this chart:</span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh5R2Iz36TCrAMTUJ47uK7A_40M41gDGOa47xY_BXhIvK0SvrjDycqDj-nDIxjPdo6i97nly720NpqX9C2tnFaHA309gv3heI4n5PI9dZRFt4rXMc1F3PMwPOon_h9oEMLffym7wLiI90Vk/s1600/Screen+Shot+2011-12-13+at+4.53.21+PM.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="420" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh5R2Iz36TCrAMTUJ47uK7A_40M41gDGOa47xY_BXhIvK0SvrjDycqDj-nDIxjPdo6i97nly720NpqX9C2tnFaHA309gv3heI4n5PI9dZRFt4rXMc1F3PMwPOon_h9oEMLffym7wLiI90Vk/s640/Screen+Shot+2011-12-13+at+4.53.21+PM.png" width="640" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
From Richard Koo</div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;">Although there were huge injections of liquidity in the form of monetary reserves injected into the system, banks didn't lend <b>because no one wanted to borrow - the same problem we are facing now in the US.</b> The slow upward movement in M2 (Monetary base plus demand deposits and some time deposits) was based on government borrowing and deficit spending. <b>And inflation was consistently nil. Although not shown, interest rates on long governments remained well under 2% for the duration.</b></span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><b><br /></b></span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;">To summarize:</span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"> 1. Balance sheet recessions - those that occur when an entire asset class blows up - are different animals, and we do not have much experience with them: the Depression, Japan from 1990 to 2007, and the US now.</span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"> 2. When personal wealth is destroyed in a tsunami-type unraveling, both consumers and companies retrench big time. 12 years and a war for the US in the Depression. 16 years of deleveraging for Japan.</span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"> 3. The government must step in and replace private spending. This happened with the New Deal replacing Hoover's fiscal discipline approach in 1933 and continued through 1937, when the hawks won the political day, and the cuts in government spending dipped the US back into deep recession. In Japan, the government was very patient. The hawks intervened twice with austerity reform moves. Each time the economy quickly moved into recession.</span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"> 4. The hawks are simply wrong, and dangerously so.<b> There is NO risk of inflation. There is also no risk that government bond rates will run away to high levels. There is, however, a HUGE risk that the hawks will not allow the necessary spending by the government to keep us moving forward.</b></span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><b><br /></b></span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;">I dearly hope we can learn from Japan. But I am not so sure.</span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<br />
<br />
<br />
<br />
<br /></td></tr>
</tbody></table>
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-62642963235088410332011-12-13T14:26:00.001-06:002011-12-13T14:46:14.799-06:00Europe<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKCsA7wJcqkhspg_62DgbXO940kggdOGJHiYq1MHx36opNAzbUUHtL7TXBdIb8zJEow1ECLQJ7Aw5wj9IZrtzs3cbaCiMe_NK5-vOUxiiWK2iAOf08gbsRO5z-HwHU3b2_a3m3TkIih6Lh/s1600/Greek+Deposits+December.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="358" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjKCsA7wJcqkhspg_62DgbXO940kggdOGJHiYq1MHx36opNAzbUUHtL7TXBdIb8zJEow1ECLQJ7Aw5wj9IZrtzs3cbaCiMe_NK5-vOUxiiWK2iAOf08gbsRO5z-HwHU3b2_a3m3TkIih6Lh/s640/Greek+Deposits+December.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">From zero hedge.com<br />
<br />
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;">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. </span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;">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?"</span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;">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.</span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;">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.</span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;">I am, quite frankly, outraged by the level of their arrogance.</span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;">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.</span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;">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.</span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;">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.</span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;">And don't believe anyone who tells you we are decoupled from Europe!</span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;"><br /></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-size: small;">Hang on!</span></div>
</td></tr>
</tbody></table>
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-20120976343835575562011-12-10T12:04:00.001-06:002011-12-10T12:04:43.636-06:00Princeton Students Occupy Goldman Sachs<iframe width="480" height="360" src="http://www.youtube.com/embed/lq-Mb7S9lkU" frameborder="0" allowfullscreen></iframe><br />
<br />
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 <b>must</b> 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.Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com1tag:blogger.com,1999:blog-7622582335639067704.post-37993151925664760492011-12-10T10:51:00.001-06:002011-12-10T10:56:22.947-06:00Dragonflies Draw Flame<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjld_4Yibxb9eBsJW3gReFpvTSgO8SrXBJOLtbK_e55xbuKHjPH1Sl_9Bg1ux8jURYEhlyFKsX8xKeeWJlI_eVsr9OpTiyEAiGgGpEJXA0LUFc1egYwPhMSKty20jxa1c6vD5UQ6bCUVn6N/s1600/FOTO_LIBEL-2.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="374" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjld_4Yibxb9eBsJW3gReFpvTSgO8SrXBJOLtbK_e55xbuKHjPH1Sl_9Bg1ux8jURYEhlyFKsX8xKeeWJlI_eVsr9OpTiyEAiGgGpEJXA0LUFc1egYwPhMSKty20jxa1c6vD5UQ6bCUVn6N/s640/FOTO_LIBEL-2.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><br />
<div align="center" class="MsoNormal" style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;"><b><u>Kingfishers</u></b><o:p></o:p></span></i></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;"><br /></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span style="font-size: x-small;"><i>Gerard Manley Hopkins<o:p></o:p></i></span></div>
<div align="center" class="MsoNormal" style="text-align: center;">
<span class="Apple-style-span" style="font-size: x-small;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>As
kingfishers catch fire, dragonflies dráw fláme;<o:p></o:p></i></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>As
tumbled over rim in roundy wells<o:p></o:p></i></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>Stones
ring; like each tucked string tells, each hung bell's<o:p></o:p></i></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>Bow
swung finds tongue to fling out broad its name;<o:p></o:p></i></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>Each
mortal thing does one thing and the same:<o:p></o:p></i></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>Deals
out that being indoors each one dwells;<o:p></o:p></i></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>Selves
- goes itself; myself it speak and spells,<o:p></o:p></i></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>Crying
Whát I do is me: for that I came.<o:p></o:p></i></span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: x-small;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>Í
say móre: the just man justices;<o:p></o:p></i></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>Kéeps
grace: thát keeps all his goings graces;<o:p></o:p></i></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>Acts
in God's eye what in God's eye he is -<o:p></o:p></i></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>Chríst
- for Christ plays in ten thousand places,<o:p></o:p></i></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>Lovely
in limbs, and lovely in eyes not his<o:p></o:p></i></span></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><i>To
the Father through the features of men's faces.</i><o:p></o:p></span></div>
<div class="MsoNormal">
<span class="Apple-style-span" style="font-size: x-small;"><br /></span></div>
</td></tr>
</tbody></table>
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-77176884193140421482011-12-10T10:40:00.001-06:002011-12-10T10:40:16.445-06:00Walking in the Embers of Ayn Rand<iframe width="480" height="360" src="http://www.youtube.com/embed/kQES16MmFNI" frameborder="0" allowfullscreen></iframe>Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com1tag:blogger.com,1999:blog-7622582335639067704.post-81627378226419269782011-12-07T10:13:00.001-06:002011-12-10T10:52:31.578-06:00Osawatomie, Kansas - 101 Years LaterIn 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:<br />
<br />
<object classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=10,0,0,0" height="245" id="msnbc3e2c01" width="420"><param name="movie" value="http://www.msnbc.msn.com/id/32545640" />
<param name="FlashVars" value="launch=45571853&width=420&height=245" />
<param name="allowScriptAccess" value="always" />
<param name="allowFullScreen" value="true" />
<param name="wmode" value="transparent" />
<embed name="msnbc3e2c01" src="http://www.msnbc.msn.com/id/32545640" width="420" height="245" FlashVars="launch=45571853&width=420&height=245" allowscriptaccess="always" allowFullScreen="true" wmode="transparent" type="application/x-shockwave-flash" pluginspage="http://www.adobe.com/shockwave/download/download.cgi?P1_Prod_Version=ShockwaveFlash"></embed></object><br />
<div style="background: transparent; color: #999999; font-family: Arial, Helvetica, sans-serif; font-size: 11px; margin-top: 5px; text-align: center; width: 420px;">
Visit msnbc.com for <a href="http://www.msnbc.msn.com/" style="border-bottom: 1px dotted #999 !important; color: #5799DB !important; font-weight: normal !important; height: 13px; text-decoration: none !important;">breaking news</a>, <a href="http://www.msnbc.msn.com/id/3032507" style="border-bottom: 1px dotted #999 !important; color: #5799DB !important; font-weight: normal !important; height: 13px; text-decoration: none !important;">world news</a>, and <a href="http://www.msnbc.msn.com/id/3032072" style="border-bottom: 1px dotted #999 !important; color: #5799DB !important; font-weight: normal !important; height: 13px; text-decoration: none !important;">news about the economy</a></div>Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-82703170477840766222011-12-06T14:44:00.001-06:002011-12-06T14:44:19.940-06:00A Greek Economist Speaks Out<object width="640" height="360"><param name="movie" value="http://www.youtube.com/v/NDl_wY8k_Wg&hl=en_US&feature=player_embedded&version=3"></param><param name="allowFullScreen" value="true"></param><param name="allowScriptAccess" value="always"></param><embed src="http://www.youtube.com/v/NDl_wY8k_Wg&hl=en_US&feature=player_embedded&version=3" type="application/x-shockwave-flash" allowfullscreen="true" allowScriptAccess="always" width="640" height="360"></embed></object>Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-53383724624909809982011-12-06T14:25:00.001-06:002011-12-06T14:39:31.011-06:00Three Strange Angels<div class="separator" style="clear: both; text-align: center;">
</div>
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjs4Pr0hn-EtsKCSFFeo9dW3aw_emL0haeZ-U7htgolok5j11eOGJd-GshS0EIblY7mUqfSVHq7djfhXXtQubj_NSwq1reQ9cCQ8APczx938Ic7FE0ftFxXdXvmA_AmkZ1pOdmlN6r70HYD/s1600/Screen-shot-2011-08-03-at-4.37.20-AM.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="462" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjs4Pr0hn-EtsKCSFFeo9dW3aw_emL0haeZ-U7htgolok5j11eOGJd-GshS0EIblY7mUqfSVHq7djfhXXtQubj_NSwq1reQ9cCQ8APczx938Ic7FE0ftFxXdXvmA_AmkZ1pOdmlN6r70HYD/s640/Screen-shot-2011-08-03-at-4.37.20-AM.png" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">From nakedcapitalism.com<br /><i><br /></i><div style="text-align: left;">
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;"><b>Three Strange Angels</b></span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;"><br /></span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">Not I, not I, but the wind that blows through me! </span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">A fine wind is blowing the new direction of Time.</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">If only I let it bear me, carry me, if only it carry me!</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">If only I am sensitive, subtle, oh, delicate, a winged gift!</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">If only, most lovely of all, I yield myself and am borrowed</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">By the fine, fine, wind that takes its course through the chaos of the world</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">Like a fine, an exquisite chisel, a wedge-blade inserted;</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;"><br /></span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">If only I am keen and hard like the sheer tip of a wedge</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">Driven by invisible blows,</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">The rock will split, we shall come at the wonder, we shall find the Hesperides.</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">Oh, for the wonder that bubbles into my soul,</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">I would be a good fountain, a good well-head,</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">Would blur no whisper, spoil no expression.</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;"><br /></span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">What is the knocking?</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">What is the knocking at the door in the night?</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">It is somebody wants to do us harm. </span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">No, no, it is the three strange angels.</span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;">Admit them, admit them. </span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;"><br /></span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;"><br /></span></i></div>
<div style="text-align: center;">
<i><span class="Apple-style-span" style="font-size: x-small;"><b>~ D.H. Lawrence</b></span></i></div>
<div style="text-align: center;">
<i><br /></i></div>
</div>
</td></tr>
</tbody></table>
<div style="text-align: center;">
<br /></div>Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-78031319111093052812011-12-05T17:13:00.001-06:002011-12-05T17:14:39.140-06:00Spirit Shining Everywhere<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQ5ilRQCvWQtTS2Dqv2hzn7R8nlNhPHTvdpLZuf1nruXe7QDsIDaEtVPQc5c3meWHc9Hxd9ONuVAm6cMmQUTQREUwoedz7wvAiNYWcoMmrjlRdWTLAO6r9-4_gYkv3KZg1F2BTi7GvjURG/s1600/Screen-shot-2011-12-03-at-2.48.49-AM.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQ5ilRQCvWQtTS2Dqv2hzn7R8nlNhPHTvdpLZuf1nruXe7QDsIDaEtVPQc5c3meWHc9Hxd9ONuVAm6cMmQUTQREUwoedz7wvAiNYWcoMmrjlRdWTLAO6r9-4_gYkv3KZg1F2BTi7GvjURG/s640/Screen-shot-2011-12-03-at-2.48.49-AM.png" width="568" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">From nakedcapitalism.com</td></tr>
</tbody></table>
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com0tag:blogger.com,1999:blog-7622582335639067704.post-32927514204168589412011-12-05T13:32:00.001-06:002011-12-05T17:00:56.748-06:00Will 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.<br />
<br />
Take a look at this chart from today's markets, about an hour ago, from <a href="http://www.zerohedge.com/news/presenting-market-schizophrenia-one-handy-chart">Zero Hedge.</a><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQPGmBkJ_5IWvNUtkw30lFmF_TJlV-8gLMzHwkrKvZRk09xZpLwyOpriICpX6ZHCKVJIinsNwD6iRjUkeN8B9woys6tIyIGi1dd7ET0gjB_fE9QHUOHs6kukaKtPHeqBrjUgvKIn6CgWDP/s1600/20111205_TSY_0.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="486" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQPGmBkJ_5IWvNUtkw30lFmF_TJlV-8gLMzHwkrKvZRk09xZpLwyOpriICpX6ZHCKVJIinsNwD6iRjUkeN8B9woys6tIyIGi1dd7ET0gjB_fE9QHUOHs6kukaKtPHeqBrjUgvKIn6CgWDP/s640/20111205_TSY_0.png" width="640" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
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.</div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
So what's the story? What narrative is at play here?</div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
</div>
<a name='more'></a><br /><br />
<div class="separator" style="clear: both; text-align: left;">
There's an EU summit this Thursday night and Friday. Today Sarkozy and Merkel met and came to agreement on the "fiscal compact" Europe needs going forward. Remember that Mario Draghi, head of the ECB, hinted broadly last week, that if there were a new "fiscal compact" to ensure budget discipline in Europe, the ECB could consider "other measures", which the market has taken to mean serious buying of sovereign debt. So with Merkel/Sarkozy, or Merkozy now on the same page, the assumption is that the other 15 countries in the Eurozone will go along with the new compact, and, beginning next week, the ECB will begin to buy. Hence happiness in equity land, and even falling bond yields on Spanish and Italian debt.</div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
So, are we there yet, Mom? I do not think so. The S&P announcement is emblematic of the powerful cross-currents Europe faces, and I will try to explain a bit more.</div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
Take a look at this picture:</div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhH_RQLK9uJ4kRE5e_r1XFA2GZebkN0dzuR8rTED5l3khgCnMo9kHw87dsHa1E0h867KDcxJI1Uz2cnS3ibN6TYFNBVwcVSZHtcpX41Te4pM3VEkvaAP4SW8gFzm7JxzRpWnXTE3MGI78kU/s1600/fornero-420x0.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="228" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhH_RQLK9uJ4kRE5e_r1XFA2GZebkN0dzuR8rTED5l3khgCnMo9kHw87dsHa1E0h867KDcxJI1Uz2cnS3ibN6TYFNBVwcVSZHtcpX41Te4pM3VEkvaAP4SW8gFzm7JxzRpWnXTE3MGI78kU/s320/fornero-420x0.jpg" width="320" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
This is Italian Labor Minister, Elsa Fornero, on Saturday announcing the key elements of the new Italian austerity plan. Not often do we see a Minister of State in tears. She was presenting the significant sacrifices the Italian people will have to make as part of the austerity program. In this case, she is trying to announce the raising of the retirement age for women from 60 to 66 by 2018. A big change.</div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
Italy's austerity plan follows Greece ( country continues to miss ever tighter, lower budget deficit targets), Ireland (doing fairly well, as exports picked up) and Portugal (planned targets not being achieved). A mixed picture at best. Belgium and France are reviewing austerity budgets. Chances are the austerity budgeting will spread into North Europe soon.</div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
Will this work? Will the deficit monster be tamed through budget cutting? Quite simply, the answer is no. As budgets are cut, economic activity shrinks, and revenues for the government shrink more than expenses do, and deficits rise. And then you are stuck in a deflationary debt spiral, moving down in a self-reinforcing spiral of increasing deficits. Deficit reduction needs growth, especially if your trading partners are contracting as well.</div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
A bad plan. All stick and no carrots. All discipline, no support. It is generated from the morality story being told that North Europe (Germany, Austria, the Netherlands) are good economic actors and South or Mediterranean Europe is bad. This is just wrong in the cases of Italy, Spain, Portugal and Ireland. Before 2008 and the Lehman crisis, they were running modest deficits or primary surpluses. Their "sin" was to buy too many German goods, which pre-2008 was funded by other European capital flow. These stopped cold after 2008, and government deficits picked up the slack, leading to the current crisis.</div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
Why doesn't Germany remember what happened at the end of the 1920s' when Wall Street capital flows ceased, driving the country into deep recession and depression? That's just what Germany and Austria have done to South Europe post 2008. A bad story. What we need is vendor financing and continued investment in the South, not arbitrary austerity imposed from outside by faceless Eurocrats.</div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
Prediction: the summit this Friday will be a success. The 17 countries in the Eurozone will sign on to the new "fiscal compact". The ECB will begin to support the market more forcefully. Equity markets will move further up...until the next shoe drops. When and in what form exactly, I can't say. Among the possible candidates are: S&P downgrades France and possibly Germany. One or more banks seize up. Some Eurozone country says "No deal". Recession hits big time in early 2012; countries miss their budget targets; and the ECB pulls back.</div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
One or more of these events could cause the market to see that an austerity only plan will fail, and that the ECB is neither able nor willing to carry the whole load. Markets will tank. Greece will default, possibly others. And we will have a true mess on our hands.</div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<div class="separator" style="clear: both; text-align: left;">
Most people are betting I am wrong, and that we will "muddle through". I think Europe is heading for the rocks.</div>
<div class="separator" style="clear: both; text-align: left;">
<br /></div>
<br />Jimhttp://www.blogger.com/profile/08673092119069231633noreply@blogger.com1