In Praise of Diversity

From Naked Capitalism.com

Is Europe About to Unravel?

From The Financial Times

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

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 These two have been replaced by unelected technocrats (Monti in Italy and Papademos in Greece), but neither the ECB nor Germany have budged on the lender of last resort issue.

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

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

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

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

Markets in December will be interesting.

Totally Cool

Structures of Oppression Are Falling

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

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

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

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

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

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

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

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

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

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

And Spirit is moving. And that gives me joy.

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

From Naked Capitalism.com

Kingfishers

Gerard Manley Hopkins

As kingfishers catch fire, dragonflies dráw fláme;

As tumbled over rim in roundy wells

Stones ring; like each tucked string tells, each hung bell's

Bow swung finds tongue to fling out broad its name;

Each mortal thing does one thing and the same:

Deals out that being indoors each one dwells;

Selves - goes itself; myself it speak and spells,

Crying Whát I do is me: for that I came.

Í say móre: the just man justices;

Kéeps grace: thát keeps all his goings graces;

Acts in God's eye what in God's eye he is -

Chríst - for Christ plays in ten thousand places,

Lovely in limbs, and lovely in eyes not his

To the Father through the features of men's faces.

The European Morality Tale

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

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

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

The Misery Index

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

The chart points up some very interesting stuff:

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

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

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

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

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

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

Where is Heaven?

From Andrew Sullivan at The Dish on Daily Beast

Sunday Morning

BY WALLACE STEVENS

I

Complacencies of the peignoir, and late

Coffee and oranges in a sunny chair,

And the green freedom of a cockatoo

Upon a rug mingle to dissipate

The holy hush of ancient sacrifice.

She dreams a little, and she feels the dark

Encroachment of that old catastrophe,

As a calm darkens among water-lights.

The pungent oranges and bright, green wings

Seem things in some procession of the dead,

Winding across wide water, without sound.

The day is like wide water, without sound,

Stilled for the passing of her dreaming feet

Over the seas, to silent Palestine,

Dominion of the blood and sepulchre.

       II

Why should she give her bounty to the dead?

What is divinity if it can come

Only in silent shadows and in dreams?

Shall she not find in comforts of the sun,

In pungent fruit and bright, green wings, or else

In any balm or beauty of the earth,

Things to be cherished like the thought of heaven?

Divinity must live within herself:

Passions of rain, or moods in falling snow;

Grievings in loneliness, or unsubdued

Elations when the forest blooms; gusty

Emotions on wet roads on autumn nights;

All pleasures and all pains, remembering

The bough of summer and the winter branch.

These are the measures destined for her soul.

A Sweet and Motley Crew

Diaster Almost Upon Us?

From a Goldman Sachs report on Zero Hedge

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


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


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


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


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


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


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

Upward Mobility in America

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

The chart above demonstrates the main finding:

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

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

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

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

          

Whither Goest Thou?

From Naked Capitalism

Utterly Transcendent

Which Came First?

From Naked Capitalism

More Images from Occupy Wall Street

On Brooklyn Bridge

The "Bat Projector" Showing on the Verizon Building

In Foley Park, before marching to Brooklyn Bridge

Europe on the Brink

Italian 10 Year Bond Prices from Zero Hedge

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

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

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

OWS - Today in New York

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

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

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

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

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

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

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

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

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

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

Disturbing

the raid on zuccotti park from Casey Neistat on Vimeo.

The Face of God

From Yves Smith at Naked Capitalism

"The enormous, invulnerable beauty of things is
the face of God.
To live gladly in its presence,
To die without grief or fear,
Knowing it survives us."

Robinson Jeffers, "Not Man Apart"

Eviction and Return: Zuccotti Park

From The Huffington Post

Mayor Bloomberg, without warning or advance notice, sent in the police at 1 am last night and evicted the protesters from Zuccotti Park. Riot gear. Lots of baton work, pepper spray and mace. Up to 200 arrests. Journalists were barred from the scene, and those that tried to enter the Park were also arrested.

In the early morning, the Occupy Wall Street group got a TRO telling New York to let the protesters back into the park, with their gear and their tents. At 5pm, the ruling was overturned: no encampment will be allowed. OWS lawyers say they will appeal.

Meanwhile protesters have been let back into the Park without their tents or bicycle generators. I spent some time watching a live feed from the Park. The protesters seem exuberant. One comment from a young woman: "We have been beaten, maced, pepper sprayed and arrested. And we are jubilant. We are more together than ever."

Do you really think the snow will stop this movement?