Esther Bubley Room at war duration residence halls, Arlington Farms June 1943
On a day like this, when Bloomberg runs the hilarious and preposterous headline “Euro Periphery Emerges as Haven as Bonds Rise”, and markets are up because the Chinese government announces a 7.4% GDP growth number, which might as well be 4.7% for all we know given the opaqueness and rosy bubbly with which Beijing is known to “calculate” these numbers, let’s talk about something entirely different. And what better to talk about than a topic I know beforehand will antagonize a substantial part of my readership? And add a title to match that?
In the comment thread to my post yesterday, This Is Where We Say Good Night And Good Luck?, a discussion emerged about overpopulation and what we should and can do about it. Lot of numbers got thrown around, as always, and as always lowering the birth rate received most attention. Some numbers are interesting though: In today’s world, some 350,000 people are born each day and 150,000 die, leaving a surplus of 200,000 every 24 hours. An estimated 106 billion people ever lived on Earth. 94% of them are dead. Most were or are poor. Over 60% live(d) in Asia.
But to get back to lowering the birth rate, that’s not going to work. For very obvious reasons. As I said yesterday:
Just lowering the birth rate doesn’t work, or at least not well. A healthy population is dependent on a healthy age balance. I don’t know how to solve the overpopulation issue, but I do know this is not the way to go. Then again, I also can’t see older people – boomers, the most numerous generation – go voluntarily in large numbers, though I’ve been suggesting it to them here at TAE.
I’ve written earlier that we may have to concede that we can’t solve this one, we’ll have to leave it to nature to do it for us.
And I think there’s a reason we need nature to solve this issue for us. That reason is our own “nature”. Or perhaps I should say “the degree to which we belong to the entire natural system”, something we have a hard time understanding because we’re so prone to thinking we are located someplace above and beyond that system. Our overpopulation problem tells us we’re not. Nor is it an exclusively human issue: all organisms will suffer it, provided they are put in the proper conditions. I put it this way:
Mankind may have invented mythological/religious stories of a deity that made us in his own image, stories that serve to make us feel elevated above all other life, and the crowning achievement of creation/evolution, but the reality is that we are no different from the yeast in the wine vat or bacteria in a petri dish, or any and all other organisms for that matter: when confronted with an energy surplus in a given environment, all species will multiply and proliferate until either they run out of space or the energy surplus runs out, and then there is a die-off.
To be exact: the die-off comes before a species can run out of space or energy, because the use of energy produces waste, and no organism can survive in a medium of its own waste (the corollary to the 2nd law of thermodynamics as defined by Herman Daly and Kenneth Townsend in their 1993 book “Valuing the Earth”). Thus, there will always be more space and more energy left even after the population has collapsed. And that collapse is inevitable. No need to worry about how many people need to disappear for any given amount of time.
I’ve often called us the most tragic species, because we have an awareness, we can see ourselves do it, but that doesn’t mean we can stop ourselves from doing it. Perhaps we need to contemplate the limits of our awareness, perhaps if we were fully aware of what we do, we wouldn’t to the damage we do. Or perhaps our awareness simply is no match for the drive to consume all energy available to us, a drive we inherited from more primitive lifeforms. However it may be, what we call our awareness, and our power of reasoning, seem to be applied in the race to consume energy as fast as we can, not to slow down the rate of consumption, even if our survival might hinge on it. What’s ironic is that the drive to consume is very close, if not identical, to the drive to survive that all life possesses.
Note that this describes us as a species, not as individuals. And while individual humans can make “decisions” that may seem very commendable, what happens is that when an individual organism “decides” to lower his/her/its consumption rate, other individuals in the group jump in and take over, so overall consumption for the group keeps rising. This difference between group behavior and – possible – individual behavior is often misinterpreted, I think, to mean that we can make the group do what the individual can do.
Overpopulation is not a problem for us, simply because we’re not capable of solving it. So it’s a problem for us, but not one we can solve. It’s not FOR US, because we have no answer, and we never will. The techno happy crowd out there has no answer either, because the more things they solve that are part of problem, the more it grows. With the same inevitable outcome, only slightly later. Technology is no match for life itself. Which is what this is, of course: there can be no life on earth if it doesn’t possess the drive to fill up every available nook and cranny, only to be held back by factors beyond its control. It’s the very essence of life.
If I had to choose a religion, that would be it: life iself. It doesn’t explain where it’s from, perhaps, but you throw a bunch of amino acids from some asteroid together in the right setting, and you’re halfway there. I don’t think that’s any less comforting than a story of a guy, who looks like me to boot, sitting on a cloud trying to keep a snake he himself just made from tempting a naked woman into eating a piece of fruit. My deity would be everywhere, in me -but not looking like me -, and in every songbird and blade of grass and dungbeetle, and in you. But we would still not be able to escape the essence of life, and given an energy surplus, we would still get into trouble.
We don’t like to admit that there are things we have no answer for, but maybe that’s primarily a late addition to our – western – cultural heritage, a disputable interpretation of the mythological idea that we were made in the image of our creator(s), and lions or songbirds or sunflowers were not. Which seems to reflect a notion, more, of us having been made in our own image, in that at least that way we get to pick what we like.
If that collapse is then inevitable, you might ask, what is it that we have to live for? Well, today’s a beautiful day.
I never met Mike, Nicole stayed at his place on a couple of occasions. For me, his early work stands out, I don’t have much need for 9/11 stuff. Great thinker, though, who’s influenced a lot of people.
MCR was my friend, my client (I was his attorney) and business partner in CollapseNet. We will gather and report THE FACTS about MCR’s death, and nothing else. On my honor, the truth of MCR’s death WILL BE TOLD, and his memory will be honored.
Once we‘re all done dissecting retail sales, what will be left?
I’m way behind the tax ball today, but I wanted to get this even busier and more important chart out to you. It tells a story about the success of QE in making stock market speculators rich, but as for everyone else, not so much. While nominal retail sales have increased, there has been virtually no growth in US real retail spending per person since 2012 after a tepid 2009-2012 recovery. Lately even nominal sales have slowed.
In 2010, Ben Bernanke said that QE would boost stock prices, and that people would spend more, benefiting the economy. Apparently he was wrong about that too.
Meanwhile, the reality is probably even worse than this chart reveals. Retail sales per capita are boosted by growing foreign buying as each year millions of tourists, not to mention border dwelling Canadians, swarm into US retail stores to shop. If these gains were to be removed from this data, the picture would be both clearer and darker. The US economy is a disaster for most Americans. It explains why, even after 5 years of “recovery” consumer sentiment has barely reached its long term downtrend line. Most Americans are doing worse.
Under the circumstances no bubble can be sustained, regardless of central bankers willing it to. Fictitious capital must eventually be replaced by real sales gains, and that is not happening.
Central banks are not omnipotent, but they can sure do a lot of damage.
Those who think that the Federal Reserve can single-handedly control how fast the economy grows don’t understand how monetary policy works. Recently there have been complaints both from within the Fed as well as from outside it that the central bank isn’t doing all it can to promote economic growth and thus faster job creation. This is easier said than done. The Fed may be a major player in the U.S. economy — but it is not the only one. The proof is in the ups and downs in the economy.
In the past 100 years that the Fed has been inexistence, there have been 19 business cycles, or an average of about one every five years. During the previous 56 years, downturns occurred once every four years, on average. So the Fed’s influence has been marginal, at best. True, the money mavens managed to keep the economy from falling into another Great Depression, back in 2008. However, it could not stave off what ultimately became known as the Great Recession — a downturn from which the economy is still trying to recover. For those of you who forgot, here’s how monetary policy works.
When it wants to boost the economy, the Fed relies mainly on increasing the money supply and lowering interest rates. More liquidity in the system at a cheaper price usually can be counted on to increase borrowing and thus spending. This, in turn, is supposed to lead to greater economic growth and greater employment. In addition to these tools, the Fed can also make it more lucrative for the banks to lend by reducing reserve requirements. And by lowering margin requirements, the central bank can promote greater demand for stocks, thus increasing wealth and confidence of shareholders.
A debate is heating up ahead of the European Central Bank’s next policy-making meeting on Wednesday: Whether the bank should engage in its own version of quantitative easing, the extraordinary bond-buying that central banks in the U.S. and U.K. have employed in their efforts to boost growth and avoid crippling deflation. Although consensus is shifting in favor of the ECB making such additional policy moves within a few weeks, it’s unclear whether they will be fully effective. Over the weekend, ECB President Mario Draghi reiterated his willingness to extend the “whatever it takes” approach he has taken toward battling financial malaise in the euro area.
Supported by an increasing number of Governing Council colleagues, he said that the central bank would consider all available policy instruments to clip the risk of deflation and to safeguard the region’s economic recovery. This has led ECB watchers to expect additional bond-buying — and might even tempt some to suggest that Draghi’s words alone could deliver a beneficial outcome without spending a single euro. There are reasons to believe, however, that such expectations may end up placing an unrealistic burden on the ECB.
Draghi’s recent pledge to use “all instruments” that fall within the ECB’s mandate is reminiscent of the powerful speech he made in London in July 2012, at a time when the financial system was riddled with cascading market dislocations that threatened the very integrity of the euro area. His exact words then: “The ECB is ready to do whatever it takes to preserve the euro.” The message of resolve was all it took to calm markets and reduce the risk of disintegration. Draghi’s words did all the heavy lifting. Now the situation is materially different. Back in 2012, the ECB faced political opposition arising out of concern that bailing out struggling countries would encourage their financial imprudence. Judging from the preliminary signals out of Germany, there is less resistance to the use of “unconventional instruments” to stabilize inflation, a traditional goal of monetary policy.
The S&P 500 is down around 4% from its highs (outperforming the high-beta hangovers of Nasdaq and Russell 2000 that were down almost 10% from their highs at today’s lows). But under the surface, the S&P is ugly with the 500 index members down 10.5% on average. 213 members of the S&P 500 are down over 10% (in correction mode). Only 72 members of the 500-stock index are ‘beating’ the index… this is not just a small-cap growth-hype selloff… it’s spreading…
A great story that Tyler Durden remains on top of. Someone’s buying Treasurys up the wazoo through Belgium, but nobody knows who or why.
When we reported last month that in a shocking twist, “Belgium” holdings of Treasurys had soared by a massive amount in the past three months, making the tiny country the third largest holder of US paper, our Belgian readers took offsense alleging it is impossible that Belgium itself could be buying all this paper, explaining it was all Euroclear. Well, yes: we know and noted that, which is why those same readers probably should have actually read the part in the post which said: “our question is: just who is Belgium being used as a front for?
Recall that for years, the “UK” line item on TIC data was simply offshore accounts transaction on behalf of China. Of course, since China hasn’t added any net US paper holdings in the past year, the UK, and China, are both irrelevant in the grand scheme of things. ”
So yes, to clarify for our trigger-happy Belgian (non) readers: it is quite clear that Belgium itself is not the buyer. What is not clear is who the mysterious buyer using Belgium as a front is. Because that same “buyer”, who to further explain is not China, just bought another whopping $31 billion in Treasurys in February, bringing the “Belgian” total to a record $341.2 billion, cementing “it”, or rather whoever the mysterious name behind the Euroclear buying rampage is, as the third largest holder of US Treasurys, well above the hedge fund buying community, also known as Caribbean Banking Centers, which held $300 billion in March.
In summary: someone, unclear who, operating through Belgium and most likely the Euroclear service (possible but unconfirmed), has added a record $141 billion in Treasurys since December, or the month in which Bernanke announced the start of the Taper, bringing the host’s total to an unprecedented $341 billion!
Also of note: Chinese holdings of US Paper dropped by $2.7 billion to $1273 billion, offset by Japan’s $9 billion increase in holdings to $1210 billion, as the convergence between the two countries resumes. One thing that is certain: the mystery buyer is not Russia, which in February, or just as the Ukraine conflict was starting, sold another $6 billion, bringing the Russian total to $126 billion, the lowest since 2011, and the biggest annual drop, -24%, in holdings in history.
Scary numbers for sure.
The majority of global fund managers believe the U.S. is still the most overvalued equity market in the world, with many instead turning their focus back toward emerging markets, according to the BofA Merrill Lynch fund manager survey from April out on Tuesday. A net 66% of the respondents found U.S. stocks too expensive, little changed from the March and February readings. Meanwhile, a net 55% think emerging markets are undervalued, the highest level ever and up from 49% in March.
Only net 2% would consider being underweight in EM stocks, down sharply from 21% in March. The survey results also showed investor attraction to growth stocks cooled in April, with a net 40% believing value stocks will outperform growth stocks over the next 12 months. “Recent market volatility has led investors to ‘taper’ their extreme bullishness on U.S. growth-plays and extreme bearishness on emerging markets,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, in the release. Additionally, fund managers increasingly believe short-term interest rates will rise over the next 12 months, with a net 66% expecting higher rates.
Tick tick tick …
Officials in a city in northern China have been busy recently sorting out a steelmaker’s debt mess that could involve as much as 20 billion yuan, even as the firm’s owner avoids attending meetings on the matter, sources close to the situati0n say. Highsee Iron and Steel Group Co. Ltd., which is based in Yuncheng City’s Wenxi County, ceased production on March 18. It has seen a host of creditors including big banks line up to get their money back. Wang Qingxian, the mayor of Yuncheng, has chaired at least three meetings with bank executives and the managers of electricity plants since early March to persuade them not to call in loans to Highsee and to continue supplying it with steady power, an official who attended the meetings said.
Li Zhaohui, the son of Highsee founder Li Haicang and the firm’s chairman, did not show up at the meetings, the official said. The only representative from the company was a deputy manager whom Li sent to give briefings on Highsee’s situation. Data from the Wenxi government shows the firm employed more than 10,000 people and paid 870 million yuan in taxes in 2010. It has been the province’s biggest private enterprise since then. The government fears that leaving Highsee on its own would drive it into bankruptcy, which would cause hundreds of thousands of people to lose job, an official in the Yuncheng government who did not want to give his name said. “The government is like a typical Chinese parent and it simply cannot let go of its star enterprise,” the official said.
A while back, I wrote a post about high-frequency trading and the Grossman-Stiglitz paradox. Today, Joseph Stiglitz gave a speech about high-frequency trading and the Grossman-Stiglitz paradox, and if you usually come here for your Grossman-Stiglitz paradox news, I guess you should go there. It’s his paradox. Half his paradox. It’s not my paradox, anyway. A brief refresher:
The Grossman-Stiglitz paradox says that if asset prices perfectly reflected all information, then there would be no reason for anyone to collect information and trade assets, so asset prices couldn’t perfectly reflect all information. High-frequency trading is really fast trading that tends to make asset prices really quickly reflect certain kinds of information – particularly, the information that informed traders are buying a stock. Stiglitz is not pro-HFT:
If sophisticated market players can devise algorithms that extract information from the patterns of trades, it can be profitable. But their profits come at the expense of someone else. And among those at whose expense it may come can be those who have spent resources to obtain information about the real economy. These market players can be thought of as stealing the information rents that otherwise would have gone to those who had invested in information. But if the returns to investing in information are reduced, the market will become less informative. Better “nanosecond” price discovery comes at the expense of a market in which prices reflect less well the underlying fundamentals. As a result, resources will not be allocated as efficiently as they otherwise would be.
Because one reason that market efficiency matters is that prices are a signal to companies about where they should invest. Facebook’s recent purchases, for instance, tell entrepreneurs that developing new messaging apps is an order of magnitude more valuable for society than is developing virtual reality.
I can’t see China run without oodles upon oodles of credit.
Hunan Xinwei Bags Company, a manufacturer of knapsacks and handbags, is struggling to survive. The Chinese economy is slowing. Wages are rising amid a shortage of blue-collar workers. And competition from countries like Vietnam is growing. But what has really hurt Hunan Xinwei in recent months has been a credit squeeze facing small and medium companies all over China. Exorbitant interest rates and a scarcity of loans at any rate have turned the financing of everything from raw materials to equipment into a crippling challenge for businesses and individuals without political connections to borrow at regulated rates from the state-controlled banking system.
“The current monthly interest rate that people like me are paying is around 3%,” compared with just 0.5% a month for regulated loans, said Yin Haibian, president of Hunan Xinwei. The credit troubles stem from the central bank’s efforts to break the country’s addiction to the debt-fueled investments in infrastructure and real estate, part of a host of reforms underway. But the government is reining in credit at a time when concerns are mounting about the health of the economy, putting Beijing in a difficult position. The latest growth figures released on Wednesday showed that the gross domestic product in the first quarter was up 7.4% from a year earlier — marginally below the government’s annual target of 7.5%. But much of that growth actually took place in the second, third and fourth quarters of last year.
Stuff we all know, explained once more.
Jamie Dimon has a message for his bank’s investors who may be concerned about rising costs for those struggling to get by: It’s not us, it’s them. In his most recent annual letter to shareholders, the chairman and chief executive officer of J.P. Morgan Chase & Co. JPM -0.87% made the argument that cumbersome regulation was making it difficult to provide credit to a large part of the population. Dimon wrote : “Nearly 40% of all Americans have FICO scores below 660. Many of the new capital rules make it prohibitively more expensive to lend to this segment.”
The problem here isn’t that Dimon is wrong. He’s probably right. New banking regulations are almost certainly making it more expensive to provide credit to everyone, rich or poor. So Dimon isn’t being disingenuous. But he is telling a half truth. The reality is that banks are far more predatory than any regulation aimed at keeping the financial system safe, no matter how dysfunctional those new government rules are. Here are five ways banks hurt middle- and low-income Americans without any help from regulators. In many of these cases, it’s regulators who have prevented the abuses from being even worse.
Credit card fees: The slipperiest slippery slope of consumer credit must be the credit card. [..]
Foreclosures: Between 2007 and 2011, more than 4 million Americans lost their homes to foreclosure. [..]
Payday lending: Banks in general have been reining in their own payday-lending operations. [..]
Overdraft fees: Americans paid more than $16 billion in overdraft fees in 2011 and the average overdraft fee was $35 on an overdraft of just $20, according to the Center for Responsible Lending. [..]
Bankruptcy: Talk about great timing, in 2005, two years before the financial crisis hit, banks lobbied and received an overhaul of the personal bankruptcy code. [..]
Nuts and bonkers.
Capital markets were once a price discovery mechanism. No more. They have become delusional after massive injections of monetary heroin by the central banks. Italy now has a 135% public debt-to-GDP ratio; a barely functioning government; a real per capita GDP level that is nearly 15% below 2008; and an overwhelming referendum in its most prosperous region—Venice—to secede. And, yes, it does get about 30% of it energy from Russia. Thus, having been given the “all clear”, the fast money boys have now driven the yield on Italy’s 10-year bond to an all-time historical law. Natch. In Janet & Mario they trust. Until they don’t. Stay tuned.
” … the government has written itself a special pass excusing its collectors from the normal restraints on debt collection.” Translation: Washington resides somewhere beyond the law.
Yesterday, I mentioned that you shouldn’t stiff the government. It has more reach than a loan shark, and it’s not really more forgiving, either. By way of reference, I pointed to an appalling story from the Washington Post that recounts how the Social Security Administration started collecting on decades-old overpayments by going after the (then) minor children of the people who collected them. Mercifully, the government has backed down. Still, it seems worth asking a question: Why the heck does the government keep doing this?
This is not the first time that the government has written itself a special pass excusing its collectors from the normal restraints on debt collection. You’re probably aware that student loan debt can’t be bankrupted except under extreme conditions. You may also be aware that tax debt is nearly as hard to get rid of. And then in 2011, the government decided to get rid of the statute of limitations on federal debt collections entirely. That’s what led to the aforementioned appalling Post story, though it was not the first to report on this; local news reporters have been covering this story for some time.
As Walter Olson notes, statutes of limitations evolved for a reason: “They protect us not only from cost, uncertainty, and the misery of legal process, but from injustice of a hundred other kinds, and they protect society itself from spiraling into a legal war of all against all.” So does the U.S. bankruptcy system, which allows an orderly resolution of debts for creditors and offers debtors a fresh start. Why doesn’t the federal government think that these excellent reasons should apply to itself? Presumably for the same reason that banks and debt collectors would like to strip debtors of their protections: It yields more revenue. I mean, maybe it’s hard on society and the debtors, but what’s that next to a few more pennies trickling into the coffers?
Only country needs to leave the EU. Only one, and then it’ll be gone.
Since its inception at the beginning of Europe’s sovereign debt crisis, the unholy alliance between the IMF, the European Central Bank and the European Commission has visited untold damage on the economies and societies of a long and fast-growing list of countries. In many ways, the conditions set by the Troika in the EU bail-out economies resemble those that a conquering army might impose on a country it occupies. The government of Greece, for example, has been reduced to mere vassal status as the country’s welfare state and public services are stripped to the bone by corporate vultures.
As the Chilean writer and political activist Luís Sepulveda said in an interview for the Greek documentary Catastroika, “What is happening in Greece is terrible. Democracy was born there and the international financial system now decides it should die there as well.” As part of that ongoing process, the costs of privatisation have been borne almost exclusively by cash-starved Greek taxpayers, while the profits – initially estimated to be worth some 50 billion euros – go to the international creditors. Entire industries, from rail to water, ports and airports, roads and healthcare – industries that are meant to serve a vital public purpose and have received decades and decades worth of public investment – are now being sold off at car boot-sale prices to private international corporations and investment funds.
And it’s not just happening in Greece. Even in countries yet to have received a bailout, pressure is building to privatise state assets. In Italy, a referendum on water privatisation was held in June 2011. Fifty-seven percent of the population turned out, with 97% of voters rejecting the proposal outright. It was as decisive a statement of the popular will you’re likely to find; yet it was also, as is so often the case with national referendums in Europe these days, the wrong answer. Undeterred by the strength of popular opposition, the Troika continued applying pressure on the Italian government to privatise state water companies, but Italy’s geriatric playboy-premier Silvio Berlusconi refused to buckle. Not that it mattered: A year later, after becoming too much of a liability to the European project, Berlusconi was toppled in a lightning-fast Brussels-orchestrated coup d’état.
Can France do it?
Xavier Bertrand, the former employment minister, said it is time to abandon the Franco-German axis that has been the guiding principle of French foreign and economic policy for half a century. “It’s important but it shouldn’t be the alpha and omega of France’s vision,” he said. “How can we pursue an energy policy if the interests of France and Germany are so different. It is better to work with the English on this subject, and the same goes for European defence. Let us recognise that the alignment with Germany is stopping us pushing for another ECB policy, one that favours growth and jobs,” he said. This refrain was picked up in an astonishing column in Le Figaro by former editor Philippe Villin last Friday in which he called for a Latin front led by France and Italy to blow up the euro.
In an open letter to Italian leader Matteo Renzi – just 17 years old at the time of Maastricht, and therefore uncompromised and free of EMU’s Original Sin – he warns the young leader that there is no hope of lifting Italy out of its low-growth debt-trap without a “return to the lira.” Even if the euro fell to 1:1 against the dollar it still would not be enough to save Italy – says Mr Villin – since the intra-EMU gulf with Germany would remain. He tells Mr Renzi to undertake a tour of southern capitals to forge a Latin alliance, then march on Berlin to inform Chancellor Angela Merkel that monetary union has become untenable. He should warn her that the end has come unless Germany does more than the bare minimum to keep EMU afloat.
The French like their food. It’s really that simple.
France’s lower house of parliament passed a law Tuesday prohibiting genetically modified (GM) maize from being grown, citing environmental concerns. The law can be applied to any GM strain that is adopted at EU level. The law follows a decree last month, which halted the planting of Monsanto’s insect-resistant maize MON810, which will be allowed for cultivation in the EU, Reuters reported. But if any strain of GM crop is adopted in the future at EU level – including Pioneer 1507, which was developed by DuPont and Dow Chemical – it will be subsequently banned in France.
Pioneer 1507 could be approved by the EU later this year, after 19 of the 28 EU member states failed to gather enough votes to block it. The law adopted Tuesday by France’s lower house (National Assembly) is similar to one rejected by the upper house (Senate) in February, which was seen as unconstitutional. “It is essential today to renew a widely shared desire to maintain the French ban. This bill strengthens the decree passed last March by preventing the immediate cultivation of GMO and extending their reach to all transgenic maize varieties” Jean Marie Le Guen, the minister in charge of relations with parliament, told the National Assembly. The current Socialist-led government in France, like the previous conservative one, has opposed the growing of GM crops because of public suspicion and protests by environmentalists.
Can Catalunya tear the EU apart?
It would be “logical” for an independent Catalonia to be accepted into the EU, a pro-independence report has concluded. The EU Commission, however, argues that according to EU treaties an independent Catalonia would be ejected from the 28-nation bloc. Catalonia’s National Transition Advisory Council released a report Tuesday detailing four possible outcomes should the autonomous region vote for independence.
The first and most likely result of the referendum would be the region’s automatic integration into the European Union. The second would see the nascent country temporarily isolated from the EU before rapidly re-joining the 28-nation bloc, while the third stipulates that Catalonia would have to apply for membership and join the queue for integration alongside countries like Turkey and Serbia. The fourth and final scenario says Catalonia would be refused entry into the EU following a referendum for independence.
In spite of Spain’s potential veto on a Catalonian referendum, the report says economic arguments will ensure the future of the autonomous region within the European Union. “The hypothetical veto by the Spanish state could obstruct and delay the incorporation of the new state in the EU, but it would not cause a very significant delay, because the disadvantages for the EU and the other member states of a slow or postponed entry would be much more significant than the meager benefits it might mean for them,” the report states.
American Democracy 2014
No city or county in Oklahoma will be allowed to set their own mandatory minimum wage or employee benefits, according to a law signed by Republican Governor Mary Fallin on Monday. The new law, formerly known as Senate Bill 1023, comes amid a nationwide movement pushing lawmakers to raise the minimum wage across the US. The federal minimum wage is $7.25 per hour, although a number of states have raised their standard and US President Obama proposed raising the national minimum to $10.10.
Conservative leaders have opposed such measures, saying that such an influx in payroll expenses would be problematic for businesses. “Senate Bill 1023 protects our economy from bad public policy that would destroy Oklahoma jobs,” Governor Fallin said in a prepared statement on Monday, as quoted by the Oklahoman. “Mandating a minimum wage increase at the local level would drive businesses to other communities and states, and would raise prices for consumers.”
Rep. Randy Grau, also a Republican, supported the House version of the bill, telling the Associated Press that such legislation is essential for state businesses. “This bill provides a level playing field for all municipalities in Oklahoma,” he said. “An artificial raise in the minimum wage could derail local economies in a matter of months. This is a fair measure for consumers, workers and small business owners.”
“The only question is how much disruption, chaos and bloodshed will attend the transition from the Old Order to whatever emerges to replace it”
In the spring of 2012, The National Interest produced a special issue under the rubric of “The Crisis of the Old Order: The Crumbling Status Quo at Home and Abroad.” The thesis was that the old era of relative global stability, forged through the crucibles of the Great Depression and World War II, was coming unglued. In introducing the broad topic to readers, TNI editors wrote, “Only through a historical perspective can we fully understand the profound developments of our time and glean, perhaps only dimly, where they are taking us. One thing is clear: they are taking us into a new era. The only question is how much disruption, chaos and bloodshed will attend the transition from the Old Order to whatever emerges to replace it.”
Since publication of that special issue of the magazine, events have seemed to bolster the thesis that the current global situation and the American domestic political situation are inherently unstable, and stability will return only with the emergence of some kind of new order. Leaving aside the U.S. domestic scene for purposes of this digression, the gathering global crisis got a penetrating survey the other day from William Pfaff, the longtime geopolitical analyst for the International Herald Tribune.
Pfaff said the world faces an “international disorder unmatched since the interwar 1930s,” fostered by the ongoing Ukraine crisis, the “self-destructive forces” of the Israeli-Palestinian conflict, growing instability within the world of Islam, and the “serious risk of collapse” of the European Union. Pfaff notes with a small measure of relief that the world isn’t beset these days by ideological dictatorships on the march or any new waves of totalitarianism. Today’s problems, he says, are merely “confusion, incompetence, and intellectual and moral disorder.” He adds: “But these are bad enough, in an over-armed world.”
What’s most troubling about all this is that today’s national leaders seem utterly lacking in any serious consciousness of just how dangerous the global situation is. The current Ukraine crisis, for example, is the product of a long-term Western tendency (the word “strategy” hardly qualifies here, given the lack of any coherent logic involved) to push eastward through what once were the buffer territories of Eastern Europe and press right up to the Russian border.
Italy sells its real estate to a bunch of billionaire US investors for pennies on the dollar. How great is that?
Prelios, the Italian asset manager studying a merger of two units with those of Fortress Investment Group, said it expects Italian banks to sell as much as 50 billion euros ($69 billion) of bad loans in the next two-to-three years. Italian banks are sitting on €160 billion of non-performing loans, a figure that will swell to €200 billion in the next two years as Italy emerges from recession, according to Riccardo Serrini, chief executive officer of Prelios Credit Servicing SpA, a unit of Milan-based Prelios.
“We’re currently assisting investors bidding for €10.9 billion of NPLs,” Serrini said in an interview in his office in Milan. “95% of investors are from the U.S. and about 70% of the loans are secured by real estate.” U.S. investors, including some without a presence in Italy, are making up for the shortfall of Italian funds that can absorb the planned disposals, Serrini said. Italian banks, which have so far resisted distressed-debt sales, are now accelerating plans to shed bad debt, which has reached record levels. They are considering pooling bad loans into separate units, or bad banks, in an attempt to free capital and increase lending capacity, as well as selling loans.