Author Archives: Lila

It’s Not the Borrowers, It’s the Lenders

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Karl Denninger at Market Ticker is usually someone I agree with, but on this he strikes me as at least partially wrong:

“But just as occurred in the 1930s, Bernanke cannot change the dynamic because there are no willing and able borrowers left.

THAT is the dynamic that sets off deflation and makes it pervasive. This is the condition that Bernanke has ignored and claimed does not exist, but the fact remains that it does.”

No willing and able borrowers left? Even anecdotal evidence says that’s not true.

People with solid credit histories are being refused loans.. and  if you have some kind of credit glitch, forget it. And forget about getting NINJA loans and liar’s loans and all the rest of the credit that used to gush from the spigot.

The banks aren’t lending. But it’s not because there are no borrowers. Of course there are people who’d like to borrow and can. A

ll the people who weren’t flipping houses and maxing out plastic, for instance. Believe it or not, there are plenty of us.

Banks aren’t lending because they don’t want to. They have other reasons besides unqualified borrowers:

*They have to shore up their balance sheets and build reserves

* They’ve been burned before, and don’t know what kind of collateral is out there and what kind of assets.

*No one knows the correct price of anything, because values are deflating in all sectors or are badly manipulated by government subsidies and intervention; and also, because the mark-to-market model was suspended (correctly, in my opinion).

*Lenders are uncertain about the future and are waiting

*Banks can get a better return investing/speculating with their money – and there are plenty of borrowers for that.

Investors are just waiting on the side-lines for the commodities/currencies/metals/housing/you-name-it casino to reopen.

Johns Lanchester on Neo-Feudal Bad Times to Come

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John Lanchester in The London Review of Books cited by Chris Hedges at Truthdig:

“The cost of daily living, from buying food to getting medical care, will become difficult for all but a few as the dollar plunges. States and cities will see their pension funds drained and finally shut down. The government will be forced to sell off infrastructure, including roads and transport, to private corporations. We will be increasingly charged by privatized utilities—think Enron—for what was once regulated and subsidized. Commercial and private real estate will be worth less than half its current value. The negative equity that already plagues 25 percent of American homes will expand to include nearly all property owners. It will be difficult to borrow and impossible to sell real estate unless we accept massive losses. There will be block after block of empty stores and boarded-up houses. Foreclosures will be epidemic. There will be long lines at soup kitchens and many, many homeless. Our corporate-controlled media, already banal and trivial, will work overtime to anesthetize us with useless gossip, spectacles, sex, gratuitous violence, fear and tawdry junk politics. America will be composed of a large dispossessed underclass and a tiny empowered oligarchy that will run a ruthless and brutal system of neo-feudalism from secure compounds. Those who resist will be silenced, many by force. We will pay a terrible price, and we will pay this price soon, for the gross malfeasance of our power elite.”

Bernanke Declares Depression Over…

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That’s it folks. Wrap it up. This here recession…correction…depress…oh whatever..is over. Time to go home. Put away your pens and paper, boys and girls.

Professor Bernanke says there’s going to be no test. Or there’s going to be just a take-home. Or better yet, you just get to write in and ask for whatever grade you want. Bob Rubin and Jamie Dimon get A’s, of course. The rest of you get good B’s…. No one fails. Ain’t life great?

Whew. That depression stuff was so, well, depressing. Glad it’s over.

Wasn’t so bad, after all, seeing as how it was the worse one in half-a-century and the sky was falling and we were all going to live in the Ozarks on canned peas and mackerel until we got raptured up… and really all that happened was some green paper got printed and we had a to listen to a lot of speeches in Barackistani (not quite as strange sounding a dialect as Bushlish but just as daft…) and then, bingo, everything’s back to normal again.

Yessir. The economy is healthy.

Except for jobs. No jobs.

What kind of recovery is that, you ask? It’s the new jobless, rocketing-inflation, trashed-currency, falling-house-price, bankrupt-government, kazillions-in-debt, trade-warring-with-China recovery – that’s what it is.

Glad you asked. Now you know…
Old Ground Hog Ben.

Here’s the news clip:

“Gold futures climbed back above the $1,000-an-ounce mark on Tuesday, after upbeat U.S. economic reports and as Federal Reserve Chairman Ben Bernanke said the recession is likely over.

However, he and other Fed officials reiterated views that unemployment will remain high and economy stay weak well into next year, fueling expectations that the central bank will continue to provide ample liquidity. ”

More at Market Watch.

Friedrich Hayek on the Pretence of Knowledge

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Friedrich Hayek on “the pretence of knowledge:”

“Unlike the position that exists in the physical sciences, in economics and other disciplines that deal with essentially complex phenomena, the aspects of the events to be accounted for about which we can get quantitative data are necessarily limited and may not include the important ones. While in the physical sciences it is generally assumed, probably with good reason, that any important factor which determines the observed events will itself be directly observable and measurable, in the study of such complex phenomena as the market, which depend on the actions of many individuals, all the circumstances which will determine the outcome of a process… will hardly ever be fully known or measurable.”

Thanks to Kevin Duffy.

Florida Republicans Purge Libertarians from GOP

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“On Friday — timed just right to minimize news coverage — Republican Party of Florida Chairman Jim Greer and the state party Grievance Committee notified a number of party members, many of them holding elective office, that they were effectively purged from the party and had been removed from their offices and would be ineligible to hold any other party positions for periods ranging from two to four years.

The targets of this purge are mostly members of the Florida chapter of the Republican Liberty Caucus, a group which seeks to return the party to its core beliefs of individual liberty, limited government, and free markets. These particular individuals were targeted because they had expressed opinions critical of party policy, candidates, and office holders, on the basis of which the grievance committee decided that they had “engaged in disruptive conduct likely to interfere with the activities of the Republican Party.”

More here at The Next Right. Thanks to reader, Zara.

The Ghost Ships of Singapore

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“Some experts believe the ratio of container ships sitting idle could rise to 25 per cent within two years in an extraordinary downturn that shipping giant Maersk has called a ‘crisis of historic dimensions‘. Last month the company reported its first half-year loss in its 105-year history.

Martin Stopford, managing director of Clarksons, London’s biggest ship broker, says container shipping has been hit particularly hard: ‘In 2006 and 2007 trade was growing at 11 per cent. In 2008 it slowed down by 4.7 per cent. This year we think it might go down by as much as eight per cent. If it costs £7,000 a day to put the ship to sea and if you only get £6,000 a day, than you have got a decision to make.

‘Yet at the same time, the supply of container ships is growing. This year, supply could be up by around 12 per cent and demand is down by eight per cent. Twenty per cent spare is a lot of spare of anything – and it’s come out of nowhere.’

These empty ships should be carrying Christmas over to the West. All retailers will have already ordered their stock for the festive season long ago. With more than 92 per cent of all goods coming into the UK by sea, much of it should be on its way here if it is going to make it to the shelves before Christmas.

Read more: http://www.dailymail.co.uk/home/moslive/article-1212013/Revealed-The-ghost-fleet-recession.html#ixzz0RB7WbWSO

via  Lew Rockwell.

Argentina and Uruguay Fight Over Polluted Water at the Hague

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The Pentagon, among others, has made the point that riparian disputes are going to be at the top of the agenda in global politics in the coming years. Water is essential to survival and central to border disputes between China and India, Pakistan and India, and even in Latin America, where water is abundant.

In this case, Uruguay’s construction of two paper mills on the River Uruguay has set off a dispute with Argentina, which claims the construction is in violation of a long-standing treaty and is polluting the river as well as the Argentina tourist town on the other side of the border. The two countries have taken the dispute to the  Hague, which is now hearing the case.

What’s my interest in this?

Uruguay remains comparatively unpolluted next to its neighbors, but the paper mills, which will boost Uruguay’s exports by 15% are symptomatic of increased development that could very well change that picture shortly. Uruguay’s attraction as a farming country is the relatively cheap cost of good quality soil, abundant water, and a history of organic use . But with multinationals and governments gobbling up land all over the world, you wonder how long that will continue.

The area around the middle of the border with Argentina, especially at the lower end, near Colonia (the Soriano area), has the highest quality soil and is intensively cultivated. Argentines often buy there because of the proximity to Buenos Aires, via the ferry at Colonia. The farming tends to horticulture, with potato farming and dairy well represented. I haven’t looked in that region because of the high prices – a hectare can run to over $8000, and I’ve seen prices as high as $20,000 and more, depending on the improvements and the location of the land.

In the middle of the border area, in the department of Paysandu, land usage runs to cattle farms and wheat.

Further north, in Salto, a pretty university town, citrus farming takes precedence, as the soil isn’t as high in fertility.

All these areas are well watered by rivers, like the Uruguay and the Rio Negro, which cut through the relatively flat, unspectacular land. But these are also the areas where land prices have shot up the most recently because of the influx of Argentines, looking for a safer place for their money and freedom from increasingly onerous agricultural laws….

Mandukya Upanishad on the Ego and Dream States

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The Upanishads are Sanskrit texts of commentary on the four primary Vedic religious classics of Hinduism (the Rig, Sama, Yajur, Atharva).

This passage is a commentary on dream analysis contained in one of them:

“Dreams, therefore, are due to repressed desires. This is one of the causes behind dreams. This is the only factor that the psychoanalysts of the West emphasise. But Indian psychologists and psychoanalysts, like the Raja Yogins and the philosophers of the Vedanta, have touched another aspect of dream. The dreams may be, to some extent, of course, the results of complexes created by frustrated desires. But, this is not wholly true. Dreams may be due to other reasons also; one such reason being the working of past Karma. The effects of past Karmas, meritorious or unmeritorious, may project themselves into dream when chances are not given to them for expression in waking life. Also, a thought of some other person may affect you. A friend of yours may be deeply thinking of you; and you may have a dream of him, or you may have a dream with experiences corresponding to his thoughts. Your mother may be far away, crying for you, and her thought can affect you; you may have a dream. All this is equal to saying that a telepathic effect can produce dreams. In the case of spiritual seekers, Guru’s grace can cause a dream; and catastrophic experiences that one may have to pass through in the waking world may pass lightly as a dream experience by his grace. Due to the power of the Guru, one may have a dream suffering, instead of a waking one…….. The reason is that you oppose their function in waking life, due to the assertions of the ego. You counteract Isvara’s working and Guru’s blessing by the action of your own egoism. But, in dreaming, the ego subsides, to some extent. You become more normal, one may say, and you approximate yourself more to reality, rather than to artificiality, in dream. Thus, it is easier for these powers to operate in dream than in waking. .”

— The Mandukya Upanishad on dreams, elucidated by Swami Krishnananda