From Zero Hedge:
Concurrent with last night's Moody's reminder that it is about to downgrade the Japanese economy, which we have long been claiming is the marginal global economic wildcard, we get an exportindustry update from the Japan Automobile Manufacturers Association. In short: April car exports were an unprecedented disaster, with the average exporter seeing a 68% drop Y/Y, with some, such as Toyota plunging from 150,118 to only 31,025 cars in April 2011
And as the Truth About Cars reports further, in absolute numbers, export-heavy Toyota was hardest hit with a loss of 119,093 vehicles over April 2010. Nissan is a distant, but nonetheless surprising second with a loss of 37,623 units.
http://www.zerohedge.com/article/april-japanese-car-exports-collapse-down-68
Tuesday, May 31, 2011
Monday, May 30, 2011
Mark Mobius Echoes Carl Icahn: Definitely Another Financial Crisis Coming
From Bloomberg:
Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven’t been resolved.
“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said at the Foreign Correspondents’ Club of Japan in Tokyo today in response to a question about price swings. “Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”
The total value of derivatives in the world exceeds total global gross domestic product by a factor of 10, said Mobius, who oversees more than $50 billion. With that volume of bets in different directions, volatility and equity market crises will occur, he said.
The global financial crisis three years ago was caused in part by the proliferation of derivative products tied to U.S. home loans that ceased performing, triggering hundreds of billions of dollars in writedowns and leading to the collapse of Lehman Brothers Holdings Inc. in September 2008. The MSCI AC World Index of developed and emerging market stocks tumbled 46 percent between Lehman’s downfall and the market bottom on March 9, 2009.
The freezing of global credit markets caused governments from Washington to Beijing to London to pump more than $3 trillion into the financial system to shore up the global economy. The MSCI AC World gauge surged 99 percent from its March 2009 low through May 27.
The largest U.S. banks have grown larger since the financial crisis, and the number of “too-big-to-fail” banks will increase by 40 percent over the next 15 years, according to data compiled by Bloomberg.
http://www.bloomberg.com/news/2011-05-30/mobius-says-fresh-financial-crisis-around-corner-amid-volatile-derivatives.html
Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven’t been resolved.
“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said at the Foreign Correspondents’ Club of Japan in Tokyo today in response to a question about price swings. “Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”
The total value of derivatives in the world exceeds total global gross domestic product by a factor of 10, said Mobius, who oversees more than $50 billion. With that volume of bets in different directions, volatility and equity market crises will occur, he said.
The global financial crisis three years ago was caused in part by the proliferation of derivative products tied to U.S. home loans that ceased performing, triggering hundreds of billions of dollars in writedowns and leading to the collapse of Lehman Brothers Holdings Inc. in September 2008. The MSCI AC World Index of developed and emerging market stocks tumbled 46 percent between Lehman’s downfall and the market bottom on March 9, 2009.
The freezing of global credit markets caused governments from Washington to Beijing to London to pump more than $3 trillion into the financial system to shore up the global economy. The MSCI AC World gauge surged 99 percent from its March 2009 low through May 27.
The largest U.S. banks have grown larger since the financial crisis, and the number of “too-big-to-fail” banks will increase by 40 percent over the next 15 years, according to data compiled by Bloomberg.
http://www.bloomberg.com/news/2011-05-30/mobius-says-fresh-financial-crisis-around-corner-amid-volatile-derivatives.html
Robert Samuelson: Europe at the Abyss
From Real Clear Politics:
It has come to this. A year after rescuing Greece from default, Europe is staring into the abyss. The bailout has proved insufficient. Greece needs more money, and it can't borrow from private markets where it faces interest rates as high as 25 percent. There is no easy escape.
What's called a "debt crisis" is increasingly a political and social crisis. Already, unemployment is 14.1 percent in Greece, 14.7 percent in Ireland, 11.1 percent in Portugal and 20.7 percent in Spain.
Some causes of Europe's plight are well-known: the harsh recession following the 2008-2009 financial crisis; aging populations coupled with costly welfare states. But there's also another less recognized culprit: the euro, the single currency now used by 17 countries.
Launched in 1999, it aimed to foster economic and political unity. For a while, it seemed to succeed. In the euro's first decade, jobs in countries using the common currency increased by 16 million.
It was a mirage. For starters, the euro fostered a credit bubble that led to booms in housing, borrowing and consumer spending. But one policy didn't fit all: Interest rates suited to Germany and France were too low for "periphery" countries (Greece, Ireland, Portugal and Spain).
Money poured into the periphery countries. There was a huge compression of interest rates. In 1997, rates on 10-year Greek government bonds averaged 9.8 percent compared to 5.7 percent for similar German bonds. By 2003, Greek bonds fetched 4.3 percent, just above the 4.1 percent of German bonds.
"The markets failed. All this would not have occurred if banks in Germany and France had not lent so much," says economist Desmond Lachman of the American Enterprise Institute. "It was like the U.S. housing market." Both American and European banks went overboard in relaxing credit standards.
http://www.realclearpolitics.com/articles/2011/05/30/europe_at_the_abyss_110025.html
It has come to this. A year after rescuing Greece from default, Europe is staring into the abyss. The bailout has proved insufficient. Greece needs more money, and it can't borrow from private markets where it faces interest rates as high as 25 percent. There is no easy escape.
What's called a "debt crisis" is increasingly a political and social crisis. Already, unemployment is 14.1 percent in Greece, 14.7 percent in Ireland, 11.1 percent in Portugal and 20.7 percent in Spain.
Some causes of Europe's plight are well-known: the harsh recession following the 2008-2009 financial crisis; aging populations coupled with costly welfare states. But there's also another less recognized culprit: the euro, the single currency now used by 17 countries.
Launched in 1999, it aimed to foster economic and political unity. For a while, it seemed to succeed. In the euro's first decade, jobs in countries using the common currency increased by 16 million.
It was a mirage. For starters, the euro fostered a credit bubble that led to booms in housing, borrowing and consumer spending. But one policy didn't fit all: Interest rates suited to Germany and France were too low for "periphery" countries (Greece, Ireland, Portugal and Spain).
Money poured into the periphery countries. There was a huge compression of interest rates. In 1997, rates on 10-year Greek government bonds averaged 9.8 percent compared to 5.7 percent for similar German bonds. By 2003, Greek bonds fetched 4.3 percent, just above the 4.1 percent of German bonds.
"The markets failed. All this would not have occurred if banks in Germany and France had not lent so much," says economist Desmond Lachman of the American Enterprise Institute. "It was like the U.S. housing market." Both American and European banks went overboard in relaxing credit standards.
http://www.realclearpolitics.com/articles/2011/05/30/europe_at_the_abyss_110025.html
Sunday, May 29, 2011
Retired Finance Professor, Michael Rozeff: Is Greece the Future of America?
From Lew Rockwell:
Greece has a sovereign debt problem. The bonds of the Greek government have been downgraded by a major rating service. Their prices have fallen sharply in the market. This means that the risk is high that the government will default on its sovereign debt.
The problem traces back to the earlier fact that for some years the government was able to borrow heavily at low interest rates. This means that it was able to sell its bonds at high prices. The problem arose because these market prices were too high.
The sovereign debt of Greece became overvalued due to central bank/banking system money inflation. This inflation, it should be strongly emphasized, originated in the fiat dollar system of the United States and the Federal Reserve.
The central banks of the world and the world money supply are heavily influenced by what the Federal Reserve does through a kind of multiplier effect, because foreign central banks respond to Fed inflation with inflation of their own. Ronald I. McKinnon explained this important process in his June 1982 article in the American Economic Review. We see it happening today when foreign banks have to inflate in reaction to QE2 in order to prevent their currencies from strengthening too much against the depreciating dollar.
The high bond prices encouraged the Greek government to borrow too heavily and to raise government spending. But since its spending was not productive, it didn’t produce high enough tax revenues to service the debt. In time the government faced the problem it now has, which is not enough tax cash flows or income to service the debt.
Monetary inflation, in other words, causes overvalued sovereign debt. This sets in motion larger government spending, higher debt loads, and an eventual fiscal crisis when tax revenues fall short of what is required to maintain government spending and service the debt.
This process goes on in addition to the business cycle effects, well-known in Austrian economics, that inflation produces. In keeping with the analogous finance literature on overvalued equity, I identify this process as one that involves agency costs of overvalued sovereign debt.
This process is only made worse when major lenders, such as large banks, have reason to believe that they occupy a privileged position and that their bond positions will be paid off by political means if necessary. These lenders then all the more become willing to buy overvalued sovereign debt.
This effect of inflation is important because of its broad applicability in an age of inflation. In particular, a number of other countries including the U.S. have followed the Greek path.
http://lewrockwell.com/rozeff/rozeff354.html
Greece has a sovereign debt problem. The bonds of the Greek government have been downgraded by a major rating service. Their prices have fallen sharply in the market. This means that the risk is high that the government will default on its sovereign debt.
The problem traces back to the earlier fact that for some years the government was able to borrow heavily at low interest rates. This means that it was able to sell its bonds at high prices. The problem arose because these market prices were too high.
The sovereign debt of Greece became overvalued due to central bank/banking system money inflation. This inflation, it should be strongly emphasized, originated in the fiat dollar system of the United States and the Federal Reserve.
The central banks of the world and the world money supply are heavily influenced by what the Federal Reserve does through a kind of multiplier effect, because foreign central banks respond to Fed inflation with inflation of their own. Ronald I. McKinnon explained this important process in his June 1982 article in the American Economic Review. We see it happening today when foreign banks have to inflate in reaction to QE2 in order to prevent their currencies from strengthening too much against the depreciating dollar.
The high bond prices encouraged the Greek government to borrow too heavily and to raise government spending. But since its spending was not productive, it didn’t produce high enough tax revenues to service the debt. In time the government faced the problem it now has, which is not enough tax cash flows or income to service the debt.
Monetary inflation, in other words, causes overvalued sovereign debt. This sets in motion larger government spending, higher debt loads, and an eventual fiscal crisis when tax revenues fall short of what is required to maintain government spending and service the debt.
This process goes on in addition to the business cycle effects, well-known in Austrian economics, that inflation produces. In keeping with the analogous finance literature on overvalued equity, I identify this process as one that involves agency costs of overvalued sovereign debt.
This process is only made worse when major lenders, such as large banks, have reason to believe that they occupy a privileged position and that their bond positions will be paid off by political means if necessary. These lenders then all the more become willing to buy overvalued sovereign debt.
This effect of inflation is important because of its broad applicability in an age of inflation. In particular, a number of other countries including the U.S. have followed the Greek path.
http://lewrockwell.com/rozeff/rozeff354.html
Hedge Fund Titan Karl Icahn: Another Major Problem Coming; System Not Working Properly
From CNBC:
I do think that there could be another major problem. Now, will it happen next week, next year, I don't know and certainly nobody knows, but I don't think that the system is working properly. I really find it amazing that we're almost back to where it was, where there's so much leverage going on in the investment banks today. There's just way too much leverage and way too much risk-taking, with other people's money. I know a lot of my friends on Wall Street will hate my saying this, but the Glass Steagall thing or something like it wasn't a bad thing. In other words, a bank should be a bank. Investment bankers should be investment bankers. Investment bankers serve a purpose, raising capital and whatever, but I think today, and i know a lot of people won't like hearing this, what's going on today, I think we're going back in the same trap, and i will tell you that very few people understood how toxic and how risky those derivatives were. CDS were extremely risky the way they were used, and you look at Wall Street and you say, hey, they did it, but then you can't really blame the Wall Street guys. You can't blame a tiger. If you take a fierce man-eating tiger and put him in with a lot of sheep, you can't blame the tiger for eating the sheep. And that's the nature of the tiger. And that's the nature of Wall Street. I'm not saying they're bad but that's their nature, and the government should regulate finance.
http://www.cnbc.com/id/43186256/Carl_Icahn_Wall_Street_Back_To_Its_Old_Tricks
I do think that there could be another major problem. Now, will it happen next week, next year, I don't know and certainly nobody knows, but I don't think that the system is working properly. I really find it amazing that we're almost back to where it was, where there's so much leverage going on in the investment banks today. There's just way too much leverage and way too much risk-taking, with other people's money. I know a lot of my friends on Wall Street will hate my saying this, but the Glass Steagall thing or something like it wasn't a bad thing. In other words, a bank should be a bank. Investment bankers should be investment bankers. Investment bankers serve a purpose, raising capital and whatever, but I think today, and i know a lot of people won't like hearing this, what's going on today, I think we're going back in the same trap, and i will tell you that very few people understood how toxic and how risky those derivatives were. CDS were extremely risky the way they were used, and you look at Wall Street and you say, hey, they did it, but then you can't really blame the Wall Street guys. You can't blame a tiger. If you take a fierce man-eating tiger and put him in with a lot of sheep, you can't blame the tiger for eating the sheep. And that's the nature of the tiger. And that's the nature of Wall Street. I'm not saying they're bad but that's their nature, and the government should regulate finance.
http://www.cnbc.com/id/43186256/Carl_Icahn_Wall_Street_Back_To_Its_Old_Tricks
Saturday, May 28, 2011
“Rejoice always, pray without ceasing, give thanks in all circumstances"
Thessalonians 5:16-18
골수암으로 투병 중인 영희씨가 백혈구 수치가 악화되어 고비를 맞는 듯하더니 안정적으로 떨어져서 드디어 두달 여 만에 요양병원으로 옮겼으나 일주일 만에 외래 검진중 다시 혈소판 수치가 악화되어 바로 그길로 시립병원에 재입원 했다. 그런데 다시 영희씨를 보러갔더니 요양병원에서의 생활이 너무 싫어서 병원으로 돌아온게 좋다는 것이다. 사실은 드디어 병원에서 퇴원했다고 해서 나는 생활하시는게 더 나으려니 싶어 다행이라고 생각했는데 그게 아니었다. 80대 치매 걸리신 대소변을 가리지 못하는 노인들과 한 방에 계시면서 냄새가 많이 힘드셨다고 한다. 혈압 체크 하러 들어왔던 담당 간호사분도 영희씨가 요양병원이 너무 싫어서 돌아와서 좋다고 하셨다고 전했다.
영희씨의 경우는 기도원 (여기서 안수기도 받는다고 맞고 불로 지진 듯한 상처가 영희씨 온몸에 있고 환자복을 입고 있으니 이게 더 훤히 들여다 보여 안쓰러운 마음은 이루 말할 수가 없다), 장애인 시설에서 생활했을 때보다 지금 시립병원에서 계시는 것이 더 좋다고 본인도 얘기한다. 시설에서는 늘 똑 같은 죽을 삼시 세끼 먹다가 식사도 병원이 좋고 (그룹홈이나 장애인 시설에 있는 친구들 모두 맛있는 것 먹는 거 참 좋아한다.) 무엇보다도 집밖으로 나가지 못한 채 실내에서만 생활하다가 매일 휠체어를 타고 산책하는 게 그리 좋으신 것 같았다. 올케 얘기가 산책한지 두 시간이 되도 들어가자는 소리를 안 한다고 한다. 그래서인지 표정도 더 밝고 편안해 보인다는 것, 삶에 대한 의지를 보이면서도 평생 장애를 안고 어려운 삶을 살아왔기 때문에 죽음에 대해 어느 정도 초연한 듯한 모습도 보인다. 그래서 큰 욕심을 부리지 않는 듯한 평안함이 느껴지기도 한다.
우리 주위에는 우리가 사소하다고 생각하는 작은 일들을 누리지 못해 간절히 원하는 많은 이들이 있다.
병실에 전화를 해 올케와 통화를 하고 나서 영희씨와 통화를 하곤 하는데 (영희씨는 아주 간단한 말만 할 수 있어서 얼굴을 보고 얘기할 때는 표정과 손짓으로 짐작이 되는 경우가 많은데 전화통화는 좀 힘든 편이다.) 한번은 전화를 하니 다른 환자 보호자께서 받으셨는데 올케는 갔고 영희씨는 잠들어 있다고 나지막한 소리로 얘기를 했다. 그랬더니 영희씨가 깨서 바꿔달라고 했다. 전화해서 자기 안부 묻는 사람은 나밖에 없는 줄 알고 본능적으로 알았던 것 같다. 어찌나 맘이 뭉클하던지 전화하는 거 어려운 일 아니니 자주 하자라고 실천하고 있다.
장애인들을 대하면서 느끼는 것 중의 하나가 내가 사랑을 1만큼 주면 10만큼 받아들인다는 것이다. 이들은 그만큼 사랑을 받아들일 그릇이 넉넉하고 순수하기 때문에 가능한 게 아닐까.
비인가 시설이나 인가 받은 곳이나 장애인 시설에 봉사를 나가면서 아쉽고 안타까운 점이 참 많다. 내게 마음을 열었던 복지사 선생님과 늘 하는 얘기가 아이들 입장에서 사랑과 헌신의 마음이 우선이 되어 아이들을 대해야지 하나의 직업이 되서는 안된다는 얘기를 나누곤 한다. 한 장애인 시설은 원장님이 장애 정도가 심한 아이들과 같이 거주하시면서 실질적으로 엄마의 역할을 하시고 계신다.(실제로 아이들도 엄마라고 부르고 또 진정으로 그렇게 생각하는 듯 했다.) 가슴에 이를 잘 새겨두고 있다.
올케의 말이 영희씨가 병이 나아도 안 나아도 걱정이라고 한다. 시설이 안 좋은 요양병원에 보내는 것도 형제들이 결정하는 일이라 본인은 아무 힘이 없다고 했다. 여기는 시립병원이지만 의료진이 서울대 의사분들이라 믿을만 하고 리모델링을 해서 시설도 손색이 없다. 시립이고 영희씨의 경우는 장애인이고 기초생활 수급자라서 비용도 아주 적게 든다. 그런데 상태가 좋아지면 계속 계실 수가 없다. 그래서 영희씨 입장에서는 아마도 적당히 아파 (다행히 영희씨는 항암치료 중에도 통증을 느끼지 않고 식사도 아주 잘 하신다.) 병원에 계속 계시는 게 최선일 거라는 대화도 나눴다. 우리 주위에는 항암치료를 받으면서 병원에 입원중인 상황이 어느 곳에 있을 때보다 더 안락할 수 있는 분들도 계시다는 것이다.
올케는 친정 엄마가 오늘도 정성 드리려고 절에 가셨다고 했다. 올케가 지난 두 달 반 동안 영희씨에게 얼마나 잘 했는지를 잘 알기에 많이 고맙고 영희씨에게도 올케 고맙지요라고 말하면 고개를 끄덕이신다. 시설에 있을 때는 내가 갈 때 마다 좋아는 했지만 그렇게 활짝 웃는 모습을 못 보았는데 병원에 계시면서는 잘 웃으신다.
영희씨가 워낙 장기간 입원해 있다 보니 다섯 명이 입원해 있는 입원실 환자들이 갈 때 마다 바뀌곤 하는데 지난 번 방문했을 때 보았던 영희씨 옆 침대를 쓰셨던 30대 여자분은 입원한지 몇 주만에 돌아가셨다고 한다. 너무 젊으신 분이 의사가 가망이 없다고 하자 환자, 남편, 친정 엄마가 밤새워 울면서 서로 미안하다는 말을 가장 많이 하다가 돌아가셔서 충격을 받았다고 올케가 전했다.
건강을 유지하려 노력도 하시면서 맡겨진 일들을 참 성실하게 해 오신 분들이 자각증상도 없이 갑자기 건강검진에서 수치가 안좋게 나와 정밀검사를 했더니 암으로 판정이 되어 어려운 시기를 보내고 계신 분들이 주위에 있다. 고 이태석 신부님도 암으로 투병중일 때 기도 많이 드렸는데 통증이 심해 고생하시다 소천하셨다. 영희씨도 병이 악화되고 있다고 주치의가 말했을 때 (내가 본인이 현재 몸 상태를 알고 준비할 시간을 줘야 하지 않겠냐고 얘기했더니 선생님도 동의를 하셨었다.) 하늘에서 데려가실 거라면 통증없이 고생하지 말고 데려가 주십사는 기도가 드려지기도 했다. 그러다가 상태가 호전되어 많이 기뻤는데, 또 나빠진 것이다.
우리가 건강에 유의를 한다고 하지만 우리의 명은 결국 하늘에서 결정하시는 게 아닌가라는 생각이 들곤 한다. 살아있는 기간 동안 하루를 소중하게 여기면서 감사하고 기뻐하고 기도하면서 생활해야 하리라.
영희씨와 같은 병실에서 다른 환자를 간병하는 전문적으로 간병일을 하는 조선족 한 분이 그 동안 암말기 환자들을 돌보면서 겪으셨던 일도 얘기해 주셨다. 보통은 항암치료가 통증을 심하게 유발하기 때문에 매우 고통스럽고 식사를 못하는 경우도 많아 간병인들이 식사하는 것을 못 먹게 훼방하는 경우도 있다고 한다. 식사를 컵라면 등으로 때우시기에 4000원 정도하는 병원 구내식당 식사가 훌륭해서 하루 한끼라도 가셔서 드시라고 했더니 돈벌러 왔는데 돈을 쓰실 수 없다고 했다.
그래서 이번에 갈때는 영희씨가 전화로 과자 먹고 싶다고 해서 백화점에 들려 쿠키도 사고 (내가 구워간 쿠키도 잘 먹기는 하지만 예쁜 틴에 든 쿠키를 선물해 주고 싶었다.) 또 늘 장애인 시설이나 병문안 갈때마다 좋은 재료 사다가 집에서 구운 빵을 가져갔고 영희씨가 잘 먹었기 때문에 이번에도 사워크림 케익을 구워갔다. 암으로 투병중이신 다른 환자분들, 간병인, 보호자 분들과 나눠먹으려고 넉넉히 준비해 가서 음료수도 나눠 먹으면서 병실에서 우리끼리 작은 파티를 가졌다. 마침 체크 하러 들렸던 간호사분도 조인했다. 이미 내가 구워간 쿠키, 빵등을 맛본 올케는 별로 달지도 않고 맛있다고 하면서 빵굽는 거 어렵지 않냐고 해서 오븐 요리보다 한식 잘 하는게 더 어려워요 했더니 정말요 하면서 함께 웃었다. 햇살이 눈부셨던 아름다운 2011년 5월 주말 오후의 순간이 영희씨 기억에 좋은 추억으로 남기를 바라면서.
어떠한 상황에서도 지속되는 깊은 하나님의 사랑
Thessalonians 5:16-18
골수암으로 투병 중인 영희씨가 백혈구 수치가 악화되어 고비를 맞는 듯하더니 안정적으로 떨어져서 드디어 두달 여 만에 요양병원으로 옮겼으나 일주일 만에 외래 검진중 다시 혈소판 수치가 악화되어 바로 그길로 시립병원에 재입원 했다. 그런데 다시 영희씨를 보러갔더니 요양병원에서의 생활이 너무 싫어서 병원으로 돌아온게 좋다는 것이다. 사실은 드디어 병원에서 퇴원했다고 해서 나는 생활하시는게 더 나으려니 싶어 다행이라고 생각했는데 그게 아니었다. 80대 치매 걸리신 대소변을 가리지 못하는 노인들과 한 방에 계시면서 냄새가 많이 힘드셨다고 한다. 혈압 체크 하러 들어왔던 담당 간호사분도 영희씨가 요양병원이 너무 싫어서 돌아와서 좋다고 하셨다고 전했다.
영희씨의 경우는 기도원 (여기서 안수기도 받는다고 맞고 불로 지진 듯한 상처가 영희씨 온몸에 있고 환자복을 입고 있으니 이게 더 훤히 들여다 보여 안쓰러운 마음은 이루 말할 수가 없다), 장애인 시설에서 생활했을 때보다 지금 시립병원에서 계시는 것이 더 좋다고 본인도 얘기한다. 시설에서는 늘 똑 같은 죽을 삼시 세끼 먹다가 식사도 병원이 좋고 (그룹홈이나 장애인 시설에 있는 친구들 모두 맛있는 것 먹는 거 참 좋아한다.) 무엇보다도 집밖으로 나가지 못한 채 실내에서만 생활하다가 매일 휠체어를 타고 산책하는 게 그리 좋으신 것 같았다. 올케 얘기가 산책한지 두 시간이 되도 들어가자는 소리를 안 한다고 한다. 그래서인지 표정도 더 밝고 편안해 보인다는 것, 삶에 대한 의지를 보이면서도 평생 장애를 안고 어려운 삶을 살아왔기 때문에 죽음에 대해 어느 정도 초연한 듯한 모습도 보인다. 그래서 큰 욕심을 부리지 않는 듯한 평안함이 느껴지기도 한다.
우리 주위에는 우리가 사소하다고 생각하는 작은 일들을 누리지 못해 간절히 원하는 많은 이들이 있다.
병실에 전화를 해 올케와 통화를 하고 나서 영희씨와 통화를 하곤 하는데 (영희씨는 아주 간단한 말만 할 수 있어서 얼굴을 보고 얘기할 때는 표정과 손짓으로 짐작이 되는 경우가 많은데 전화통화는 좀 힘든 편이다.) 한번은 전화를 하니 다른 환자 보호자께서 받으셨는데 올케는 갔고 영희씨는 잠들어 있다고 나지막한 소리로 얘기를 했다. 그랬더니 영희씨가 깨서 바꿔달라고 했다. 전화해서 자기 안부 묻는 사람은 나밖에 없는 줄 알고 본능적으로 알았던 것 같다. 어찌나 맘이 뭉클하던지 전화하는 거 어려운 일 아니니 자주 하자라고 실천하고 있다.
장애인들을 대하면서 느끼는 것 중의 하나가 내가 사랑을 1만큼 주면 10만큼 받아들인다는 것이다. 이들은 그만큼 사랑을 받아들일 그릇이 넉넉하고 순수하기 때문에 가능한 게 아닐까.
비인가 시설이나 인가 받은 곳이나 장애인 시설에 봉사를 나가면서 아쉽고 안타까운 점이 참 많다. 내게 마음을 열었던 복지사 선생님과 늘 하는 얘기가 아이들 입장에서 사랑과 헌신의 마음이 우선이 되어 아이들을 대해야지 하나의 직업이 되서는 안된다는 얘기를 나누곤 한다. 한 장애인 시설은 원장님이 장애 정도가 심한 아이들과 같이 거주하시면서 실질적으로 엄마의 역할을 하시고 계신다.(실제로 아이들도 엄마라고 부르고 또 진정으로 그렇게 생각하는 듯 했다.) 가슴에 이를 잘 새겨두고 있다.
올케의 말이 영희씨가 병이 나아도 안 나아도 걱정이라고 한다. 시설이 안 좋은 요양병원에 보내는 것도 형제들이 결정하는 일이라 본인은 아무 힘이 없다고 했다. 여기는 시립병원이지만 의료진이 서울대 의사분들이라 믿을만 하고 리모델링을 해서 시설도 손색이 없다. 시립이고 영희씨의 경우는 장애인이고 기초생활 수급자라서 비용도 아주 적게 든다. 그런데 상태가 좋아지면 계속 계실 수가 없다. 그래서 영희씨 입장에서는 아마도 적당히 아파 (다행히 영희씨는 항암치료 중에도 통증을 느끼지 않고 식사도 아주 잘 하신다.) 병원에 계속 계시는 게 최선일 거라는 대화도 나눴다. 우리 주위에는 항암치료를 받으면서 병원에 입원중인 상황이 어느 곳에 있을 때보다 더 안락할 수 있는 분들도 계시다는 것이다.
올케는 친정 엄마가 오늘도 정성 드리려고 절에 가셨다고 했다. 올케가 지난 두 달 반 동안 영희씨에게 얼마나 잘 했는지를 잘 알기에 많이 고맙고 영희씨에게도 올케 고맙지요라고 말하면 고개를 끄덕이신다. 시설에 있을 때는 내가 갈 때 마다 좋아는 했지만 그렇게 활짝 웃는 모습을 못 보았는데 병원에 계시면서는 잘 웃으신다.
영희씨가 워낙 장기간 입원해 있다 보니 다섯 명이 입원해 있는 입원실 환자들이 갈 때 마다 바뀌곤 하는데 지난 번 방문했을 때 보았던 영희씨 옆 침대를 쓰셨던 30대 여자분은 입원한지 몇 주만에 돌아가셨다고 한다. 너무 젊으신 분이 의사가 가망이 없다고 하자 환자, 남편, 친정 엄마가 밤새워 울면서 서로 미안하다는 말을 가장 많이 하다가 돌아가셔서 충격을 받았다고 올케가 전했다.
건강을 유지하려 노력도 하시면서 맡겨진 일들을 참 성실하게 해 오신 분들이 자각증상도 없이 갑자기 건강검진에서 수치가 안좋게 나와 정밀검사를 했더니 암으로 판정이 되어 어려운 시기를 보내고 계신 분들이 주위에 있다. 고 이태석 신부님도 암으로 투병중일 때 기도 많이 드렸는데 통증이 심해 고생하시다 소천하셨다. 영희씨도 병이 악화되고 있다고 주치의가 말했을 때 (내가 본인이 현재 몸 상태를 알고 준비할 시간을 줘야 하지 않겠냐고 얘기했더니 선생님도 동의를 하셨었다.) 하늘에서 데려가실 거라면 통증없이 고생하지 말고 데려가 주십사는 기도가 드려지기도 했다. 그러다가 상태가 호전되어 많이 기뻤는데, 또 나빠진 것이다.
우리가 건강에 유의를 한다고 하지만 우리의 명은 결국 하늘에서 결정하시는 게 아닌가라는 생각이 들곤 한다. 살아있는 기간 동안 하루를 소중하게 여기면서 감사하고 기뻐하고 기도하면서 생활해야 하리라.
영희씨와 같은 병실에서 다른 환자를 간병하는 전문적으로 간병일을 하는 조선족 한 분이 그 동안 암말기 환자들을 돌보면서 겪으셨던 일도 얘기해 주셨다. 보통은 항암치료가 통증을 심하게 유발하기 때문에 매우 고통스럽고 식사를 못하는 경우도 많아 간병인들이 식사하는 것을 못 먹게 훼방하는 경우도 있다고 한다. 식사를 컵라면 등으로 때우시기에 4000원 정도하는 병원 구내식당 식사가 훌륭해서 하루 한끼라도 가셔서 드시라고 했더니 돈벌러 왔는데 돈을 쓰실 수 없다고 했다.
그래서 이번에 갈때는 영희씨가 전화로 과자 먹고 싶다고 해서 백화점에 들려 쿠키도 사고 (내가 구워간 쿠키도 잘 먹기는 하지만 예쁜 틴에 든 쿠키를 선물해 주고 싶었다.) 또 늘 장애인 시설이나 병문안 갈때마다 좋은 재료 사다가 집에서 구운 빵을 가져갔고 영희씨가 잘 먹었기 때문에 이번에도 사워크림 케익을 구워갔다. 암으로 투병중이신 다른 환자분들, 간병인, 보호자 분들과 나눠먹으려고 넉넉히 준비해 가서 음료수도 나눠 먹으면서 병실에서 우리끼리 작은 파티를 가졌다. 마침 체크 하러 들렸던 간호사분도 조인했다. 이미 내가 구워간 쿠키, 빵등을 맛본 올케는 별로 달지도 않고 맛있다고 하면서 빵굽는 거 어렵지 않냐고 해서 오븐 요리보다 한식 잘 하는게 더 어려워요 했더니 정말요 하면서 함께 웃었다. 햇살이 눈부셨던 아름다운 2011년 5월 주말 오후의 순간이 영희씨 기억에 좋은 추억으로 남기를 바라면서.
어떠한 상황에서도 지속되는 깊은 하나님의 사랑
Friday, May 27, 2011
Rethinking Korea’s Innovation Engine (Part 2): Technology Development during Early Industrialization
Technological development had been regarded as an economic engine of growth in the early days of industrialization.
The Park Chung-hee regime initiated and subsidized chaebols’ growth to use them as locomotives for rapid economic development. Korea had promoted Korea Inc., like Japan had facilitated ‘Japan Inc.’. Chaebols in turn played a key role in high-tech development and growth…
Big corporation-centered industrial structure, big government interventions, export-driven mercantilist growth strategy which was set up during the early stage of industrialization have some fundamental shortcomings and its effects on Korea’s innovation engine last a lot longer than one would have imagined...
It shouldn’t be overlooked that the policy effect of the early economic and monetary system was to centralize wealth and power. This has far reaching ramifications, intended or unintended…
The core of the question is: although the regime considered technological development an integral part of growing the economy and developing the means of production, was this intended to grow the middle class and their standards of living, which are required to grow and maintain a healthy society; or did the regime need it as a legitimate means to sustain their power?
Even if the regime was greatly interested in enhancing technological capacity as a means of empowering and enriching the middle class, their policy choice has yielded some negative consequences…
The 1997 financial crisis Korea went through and the current economic predicament are rooted in the structural problems initiated in the early period of industrialization to some extent.
Technology development policy, excessive government intervention and mercantilist policy in this period need to be examined in the larger context of the economic/social/political landscape that allows the wealth of a nation to develop and grow…
(A detailed analysis on this topic won’t be shared due to the proprietary nature of the content.)
The Park Chung-hee regime initiated and subsidized chaebols’ growth to use them as locomotives for rapid economic development. Korea had promoted Korea Inc., like Japan had facilitated ‘Japan Inc.’. Chaebols in turn played a key role in high-tech development and growth…
Big corporation-centered industrial structure, big government interventions, export-driven mercantilist growth strategy which was set up during the early stage of industrialization have some fundamental shortcomings and its effects on Korea’s innovation engine last a lot longer than one would have imagined...
It shouldn’t be overlooked that the policy effect of the early economic and monetary system was to centralize wealth and power. This has far reaching ramifications, intended or unintended…
The core of the question is: although the regime considered technological development an integral part of growing the economy and developing the means of production, was this intended to grow the middle class and their standards of living, which are required to grow and maintain a healthy society; or did the regime need it as a legitimate means to sustain their power?
Even if the regime was greatly interested in enhancing technological capacity as a means of empowering and enriching the middle class, their policy choice has yielded some negative consequences…
The 1997 financial crisis Korea went through and the current economic predicament are rooted in the structural problems initiated in the early period of industrialization to some extent.
Technology development policy, excessive government intervention and mercantilist policy in this period need to be examined in the larger context of the economic/social/political landscape that allows the wealth of a nation to develop and grow…
(A detailed analysis on this topic won’t be shared due to the proprietary nature of the content.)
The Evolution and Persistence of Inflation in China and Its Consequences: Why the China Domino Has Fallen
From Societe Generale’s report:
Quite simply, the domino theory of 2011 is that when China comes under the influence of inflation, the surrounding countries, those with the most immediate trade ties, would also fall to inflation. It will only be a matter of time till those economies with the greatest trade ties; indeed the entire world has succumbed to the great inflation cascade emanating from China.
The first domino is China creating autonomous structural inflation: China’s domestic inflation accelerated at an unprecedented pace at the end of 2010 and policy makers remain well behind the curve. As China engineers its economy to a more domestically focused one, its demand curve is shifting outwards and the global supply curve has been inelastic in response. That domino has already fallen and is the focus of this paper.
http://www.scribd.com/doc/56479179/China-Domino
Quite simply, the domino theory of 2011 is that when China comes under the influence of inflation, the surrounding countries, those with the most immediate trade ties, would also fall to inflation. It will only be a matter of time till those economies with the greatest trade ties; indeed the entire world has succumbed to the great inflation cascade emanating from China.
The first domino is China creating autonomous structural inflation: China’s domestic inflation accelerated at an unprecedented pace at the end of 2010 and policy makers remain well behind the curve. As China engineers its economy to a more domestically focused one, its demand curve is shifting outwards and the global supply curve has been inelastic in response. That domino has already fallen and is the focus of this paper.
http://www.scribd.com/doc/56479179/China-Domino
Wednesday, May 25, 2011
Washington: IAEA Knew within Weeks of Japanese Earthquake that Reactors Had Melted Down…Public Not Told for a Month and a Half
From Washington's blog:
As I noted last week, reactors 1, 2 and 3 all melted down within hours of the Japanese earthquake.
In other words, the IAEA knew in late March that there was a meltdown. The IAEA informs all of its member states of important nuclear developments.
Government agencies sat on this information, and the world didn’t learn the truth until the operator of the stricken reactors itself made the announcement a month and a half later.
This is not entirely surprising given that governments have been covering up nuclear meltdowns for fifty years to protect the nuclear industry.
http://www.washingtonsblog.com/2011/05/iaea-knew-within-weeks-of-japanese.html
As I noted last week, reactors 1, 2 and 3 all melted down within hours of the Japanese earthquake.
In other words, the IAEA knew in late March that there was a meltdown. The IAEA informs all of its member states of important nuclear developments.
Government agencies sat on this information, and the world didn’t learn the truth until the operator of the stricken reactors itself made the announcement a month and a half later.
This is not entirely surprising given that governments have been covering up nuclear meltdowns for fifty years to protect the nuclear industry.
http://www.washingtonsblog.com/2011/05/iaea-knew-within-weeks-of-japanese.html
According to Moody’s, Korea’s Household Debt Biggest Risk Factor
From Arirang:
Credit ratings agency Moody's has highlighted household debt as one of the biggest risk factors affecting the Korean banking industry.
According to the Korea Center for International Finance on Wednesday, Moody's said that the country's banking sector is showing signs of a gradual recovery in terms of profitability and asset quality after the global financial crisis hit in 2008.
However, it stressed that increasing household debt could put the industry in danger in the future.
http://www.arirang.co.kr/News/News_View.asp?nseq=116336&code=Ne4&category=3
Credit ratings agency Moody's has highlighted household debt as one of the biggest risk factors affecting the Korean banking industry.
According to the Korea Center for International Finance on Wednesday, Moody's said that the country's banking sector is showing signs of a gradual recovery in terms of profitability and asset quality after the global financial crisis hit in 2008.
However, it stressed that increasing household debt could put the industry in danger in the future.
http://www.arirang.co.kr/News/News_View.asp?nseq=116336&code=Ne4&category=3
Mark Provost on Why the Rich Love Unemployment
From Truthout:
The gap between economic growth and job creation reflects three separate but mutually reinforcing factors: US corporate governance, Obama’s economic policies and the deregulation of US labor markets.
Old economic models assume that companies merely react to external changes in demand – lacking independent agency or power. While executives must adapt to falling demand, they retain a fair amount of discretion in how they will respond and who will bear the brunt of the pain. Corporate culture and organization vary from country to country.
In the boardrooms of corporate America, profits aren't everything - they are the only thing. A JPMorgan research report concludes that the current corporate profit recovery is more dependent on falling unit-labor costs than during any previous expansion. At some level, corporate executives are aware that they are lowering workers' living standards, but their decisions are neither coordinated nor intentionally harmful. Call it the "paradox of profitability." Executives are acting in their own and their shareholders' best interest: maximizing profit margins in the face of weak demand by extensive layoffs and pay cuts. But what has been good for every company's income statement has been a disaster for working families and their communities.
Obama's lopsided recovery also reflects lopsided government intervention. Apart from all the talk about jobs, the Obama administration never supported a concrete employment plan. The stimulus provided relief, but it was too small and did not focus on job creation.
http://truthout.org/why-rich-love-high-unemployment/1305061465
The gap between economic growth and job creation reflects three separate but mutually reinforcing factors: US corporate governance, Obama’s economic policies and the deregulation of US labor markets.
Old economic models assume that companies merely react to external changes in demand – lacking independent agency or power. While executives must adapt to falling demand, they retain a fair amount of discretion in how they will respond and who will bear the brunt of the pain. Corporate culture and organization vary from country to country.
In the boardrooms of corporate America, profits aren't everything - they are the only thing. A JPMorgan research report concludes that the current corporate profit recovery is more dependent on falling unit-labor costs than during any previous expansion. At some level, corporate executives are aware that they are lowering workers' living standards, but their decisions are neither coordinated nor intentionally harmful. Call it the "paradox of profitability." Executives are acting in their own and their shareholders' best interest: maximizing profit margins in the face of weak demand by extensive layoffs and pay cuts. But what has been good for every company's income statement has been a disaster for working families and their communities.
Obama's lopsided recovery also reflects lopsided government intervention. Apart from all the talk about jobs, the Obama administration never supported a concrete employment plan. The stimulus provided relief, but it was too small and did not focus on job creation.
http://truthout.org/why-rich-love-high-unemployment/1305061465
Tuesday, May 24, 2011
Ian Fletcher: Why America’s Manufacturing Recovery Is a Myth
From the Huffington Post:
Talk of a manufacturing revival is in the air. America has, in fact, gained a quarter-million industrial jobs (source) since the start of 2010. Unfortunately, this is less than 15 percent of the number lost during the recession. Furthermore, after this teasing uptick, U.S. manufacturing output seems to be stalling again. So it worth revisiting a much denied fact I have written about before here and here: American manufacturing is in a state of profound crisis.
First off, looking at aggregate manufacturing output, as most of these analyses do, obscures the fact that total output has only been stable (or close to it) because of a few sectors which have grown enormously. The rest of the manufacturing economy has been declining. According to a recent report from the Information Technology and Innovation Foundation,
Most manufacturing sectors actually shrank in terms of real value-added from 2000 to 2009. In fact, from 2000 to 2009, fifteen of nineteen U.S. manufacturing sectors saw absolute declines in output; they were producing less in 2009 than they were at the start of the decade.
The bottom line? Fifteen manufacturing sectors, comprising nearly 80 percent of U.S. manufacturing output, produced less in 2009 than in 2000.
Isn't the decline in U.S. manufacturing employment simply due to the relentless march of factory automation, and therefore a good thing? No. If the decline in manufacturing employment were due simply to the endless march of automation, we would expect to see slowly declining employment in this sector since a peak shortly after WWII. But instead, what see is a relatively stable employment level, but then things fall off a cliff after Y2K.
http://www.huffingtonpost.com/ian-fletcher/the-manufacturing-rebound_b_865166.html
Talk of a manufacturing revival is in the air. America has, in fact, gained a quarter-million industrial jobs (source) since the start of 2010. Unfortunately, this is less than 15 percent of the number lost during the recession. Furthermore, after this teasing uptick, U.S. manufacturing output seems to be stalling again. So it worth revisiting a much denied fact I have written about before here and here: American manufacturing is in a state of profound crisis.
First off, looking at aggregate manufacturing output, as most of these analyses do, obscures the fact that total output has only been stable (or close to it) because of a few sectors which have grown enormously. The rest of the manufacturing economy has been declining. According to a recent report from the Information Technology and Innovation Foundation,
Most manufacturing sectors actually shrank in terms of real value-added from 2000 to 2009. In fact, from 2000 to 2009, fifteen of nineteen U.S. manufacturing sectors saw absolute declines in output; they were producing less in 2009 than they were at the start of the decade.
The bottom line? Fifteen manufacturing sectors, comprising nearly 80 percent of U.S. manufacturing output, produced less in 2009 than in 2000.
Isn't the decline in U.S. manufacturing employment simply due to the relentless march of factory automation, and therefore a good thing? No. If the decline in manufacturing employment were due simply to the endless march of automation, we would expect to see slowly declining employment in this sector since a peak shortly after WWII. But instead, what see is a relatively stable employment level, but then things fall off a cliff after Y2K.
http://www.huffingtonpost.com/ian-fletcher/the-manufacturing-rebound_b_865166.html
Paul Craig Roberts: There Is Probably More Democracy In China Than There Is in the West
From Zero Hedge:
The west prides itself that it is the standard for the world, that it is a democracy. But nowehere do you see democratic outcomes: not in Greece, not in Ireland, not in the UK, not here, the outcomes are always to punish the innocent and reward the guilty. And that's what the Greeks are in the streets, protesting. We see this all over the west. There is no democracy, there are oligarchies, some of these smaller European countries are not even run by their own governments, they are run by Wall Street... There is probably more democracy in China than there is in the west. Revolution is the only answer... We are confronted with a curious situation. Throughout the west we think we have democracy, we hold ourselves up high, we demonize China, we talk about the mafia state of Russia, we talk about the Arabs and so on, but where is the democracy here?
http://www.zerohedge.com/article/co-founder-reagonomics-paul-craig-roberts-there-probably-more-democracy-china-there-west?page=1
The west prides itself that it is the standard for the world, that it is a democracy. But nowehere do you see democratic outcomes: not in Greece, not in Ireland, not in the UK, not here, the outcomes are always to punish the innocent and reward the guilty. And that's what the Greeks are in the streets, protesting. We see this all over the west. There is no democracy, there are oligarchies, some of these smaller European countries are not even run by their own governments, they are run by Wall Street... There is probably more democracy in China than there is in the west. Revolution is the only answer... We are confronted with a curious situation. Throughout the west we think we have democracy, we hold ourselves up high, we demonize China, we talk about the mafia state of Russia, we talk about the Arabs and so on, but where is the democracy here?
http://www.zerohedge.com/article/co-founder-reagonomics-paul-craig-roberts-there-probably-more-democracy-china-there-west?page=1
Monday, May 23, 2011
Chinese Manufacturing Index Fell to Lowest in 10 Months
From Bloomberg:
A Chinese manufacturing index fell to its lowest level in 10 months, adding to signs that economic growth is cooling after the government raised interest rates and curbed lending to rein in inflation.
The preliminary purchasing managers’ index compiled by HSBC Holdings Plc and Markit Economics dropped to 51.1 in May from a final reading of 51.8 in April. A number above 50 indicates expansion.
HSBC’s preliminary manufacturing index, called the Flash PMI, is based on 85 percent to 90 percent of the total responses to its monthly purchasing managers’ survey sent to executives in more than 400 manufacturing companies.
New export orders contracted in May and stocks of purchases and finished goods fell at a faster rate, HSBC said. An output gauge declined to a 10-month low, although it remained above the 50 level that divides expansion from contraction, the bank said.
http://www.bloomberg.com/news/2011-05-23/china-s-manufacturing-may-slow-on-government-s-tighter-policy-pmi-shows.html
A Chinese manufacturing index fell to its lowest level in 10 months, adding to signs that economic growth is cooling after the government raised interest rates and curbed lending to rein in inflation.
The preliminary purchasing managers’ index compiled by HSBC Holdings Plc and Markit Economics dropped to 51.1 in May from a final reading of 51.8 in April. A number above 50 indicates expansion.
HSBC’s preliminary manufacturing index, called the Flash PMI, is based on 85 percent to 90 percent of the total responses to its monthly purchasing managers’ survey sent to executives in more than 400 manufacturing companies.
New export orders contracted in May and stocks of purchases and finished goods fell at a faster rate, HSBC said. An output gauge declined to a 10-month low, although it remained above the 50 level that divides expansion from contraction, the bank said.
http://www.bloomberg.com/news/2011-05-23/china-s-manufacturing-may-slow-on-government-s-tighter-policy-pmi-shows.html
Friday, May 20, 2011
Rethinking Korea’s Innovation Engine (Part I)
Much of Korea’s innovation in the high-tech sector has been predicated on borrowed technology. Yes, its technological progress in a relatively short timeframe has been impressive. And yet, other than high-tech manufacturing competence and product development capacity, there have been significant skills shortages at the very high end in technology, which has led to technology trade deficit…
I’ve pointed out what has held up Korea’s exports and how Korea’s high tech firms have developed their innovation capacity. I have also discussed the limits of Korea’s innovation mechanism.
The world economy is going through a secular change, and Korean high-tech firms know that. The new technology industry has to form. We are at a point in which the Korean high tech firms need to go beyond the traditional technology boundary…
Since there is a sign of sliding exports as I mentioned in a prior post, Korea may be forced to rethink where its innovation engine lies.
(A detailed analysis on this topic won’t be shared due to the proprietary nature of the content.)
I’ve pointed out what has held up Korea’s exports and how Korea’s high tech firms have developed their innovation capacity. I have also discussed the limits of Korea’s innovation mechanism.
The world economy is going through a secular change, and Korean high-tech firms know that. The new technology industry has to form. We are at a point in which the Korean high tech firms need to go beyond the traditional technology boundary…
Since there is a sign of sliding exports as I mentioned in a prior post, Korea may be forced to rethink where its innovation engine lies.
(A detailed analysis on this topic won’t be shared due to the proprietary nature of the content.)
Thursday, May 19, 2011
Marshall Auerback: IMF’s Predatory Policies Likely to Continue with New Leadership
Besides this article, those who want to know how the IMF forced some countries to borrow the money may want to read Simon Johnson’s (former IMF chief economist and MIT professor) excellent article in the below link.
http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/
From New Deal 2.0:
It doesn’t matter who leads the IMF when the institution is governed by ideology.
Greece and Ireland appear to have lost an important political ally with the sidelining of Dominique Strauss-Kahn as both plead for more financial assistance from European partners to avoid an early restructuring of debt. The key word is “appears,” as in truth, arsenic remains arsenic, even if it is coated in sugar by an ostensible champagne socialist like Mr. Strauss-Kahn.
It has been clear for several decades, however, that this argument is a myth, and that the promised land it envisions is a mirage. Consider the Fund’s experience with East Asia in 1997. Having praised the governments’ economic management up to just weeks before the onset in July 1997, the Fund panicked as much as the investors, intensifying the pullout. It called for the closure of insolvent finance companies and banks without seeming to worry about how uninsured depositors were treated, which triggered bank runs; and it identified fundamental problems that had to be fixed before growth could resume, sending a message that the economies were structurally unsound.
In the intervening years, the IMF has learned nothing, but still peddles the same economic myths that have done so much damage to the global economy. Ireland was an early (and eager) austerity proponent — starting to cut in early 2009. We were told that things would be improving as a result of the public cutbacks because all those tax-fearing consumers and investors were poised and ready to spend their savings – which were being earmarked to pay back the higher taxes that were going to be inevitably imposed to pay back the deficits.
This nonsense was all of the rave as mainstream economists and public finance commentators supported the Irish government’s manic decision to impose fiscal austerity on its near-ruined economy. And its misguided financial guarantees to its banks — which were vastly oversized relative to the size of the economy – significantly worsened the country’s budget deficit. That “busted the budget” and generated the current problems. In important respects, Ireland reproduced the Icelandic problem, with similar results. As we know, the people of Iceland have recently voted to undo the bank bail-out in spite of threats issued by the likes of the IMF.
Same thing in Greece. Unfortunately, the IMF supported behind this destructive economic austerity even under Strauss-Kahn.
It’s the institution that’s the problem, no matter who takes over from Strauss-Kahn, whose future public career is almost certainly shredded regardless of the ultimate outcome of this particular case. Expecting the Fund to change is akin to painting a leopard black, and thinking that this will change its predatory behavior.
http://www.newdeal20.org/2011/05/18/imfs-predatory-policies-likely-to-continue-with-new-leadership-45453
http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/
From New Deal 2.0:
It doesn’t matter who leads the IMF when the institution is governed by ideology.
Greece and Ireland appear to have lost an important political ally with the sidelining of Dominique Strauss-Kahn as both plead for more financial assistance from European partners to avoid an early restructuring of debt. The key word is “appears,” as in truth, arsenic remains arsenic, even if it is coated in sugar by an ostensible champagne socialist like Mr. Strauss-Kahn.
It has been clear for several decades, however, that this argument is a myth, and that the promised land it envisions is a mirage. Consider the Fund’s experience with East Asia in 1997. Having praised the governments’ economic management up to just weeks before the onset in July 1997, the Fund panicked as much as the investors, intensifying the pullout. It called for the closure of insolvent finance companies and banks without seeming to worry about how uninsured depositors were treated, which triggered bank runs; and it identified fundamental problems that had to be fixed before growth could resume, sending a message that the economies were structurally unsound.
In the intervening years, the IMF has learned nothing, but still peddles the same economic myths that have done so much damage to the global economy. Ireland was an early (and eager) austerity proponent — starting to cut in early 2009. We were told that things would be improving as a result of the public cutbacks because all those tax-fearing consumers and investors were poised and ready to spend their savings – which were being earmarked to pay back the higher taxes that were going to be inevitably imposed to pay back the deficits.
This nonsense was all of the rave as mainstream economists and public finance commentators supported the Irish government’s manic decision to impose fiscal austerity on its near-ruined economy. And its misguided financial guarantees to its banks — which were vastly oversized relative to the size of the economy – significantly worsened the country’s budget deficit. That “busted the budget” and generated the current problems. In important respects, Ireland reproduced the Icelandic problem, with similar results. As we know, the people of Iceland have recently voted to undo the bank bail-out in spite of threats issued by the likes of the IMF.
Same thing in Greece. Unfortunately, the IMF supported behind this destructive economic austerity even under Strauss-Kahn.
It’s the institution that’s the problem, no matter who takes over from Strauss-Kahn, whose future public career is almost certainly shredded regardless of the ultimate outcome of this particular case. Expecting the Fund to change is akin to painting a leopard black, and thinking that this will change its predatory behavior.
http://www.newdeal20.org/2011/05/18/imfs-predatory-policies-likely-to-continue-with-new-leadership-45453
Japan’s Q1 GDP Plunges More Than Estimated 3.7%
From Bloomberg:
Japan’s economy shrank more than estimated in the first quarter after the March 11 earthquake and tsunami disrupted production and prompted consumers to cut back spending, sending the nation to its third recession in a decade.
Gross domestic product contracted an annualized 3.7 percent in the three months through March, following a revised 3 percent drop in the previous quarter, the Cabinet Office said today in Tokyo. The median forecast of 23 economists surveyed by Bloomberg News was for a 1.9 percent drop.
The March disaster hit an economy already weighed down by years of deflation and subdued consumer spending, and slashed profits at companies including Toyota Motor Corp. as factories were shut. The economy, now the smallest size since 1991 unadjusted for price changes, may shrink further this quarter before rebounding later in 2011 as reconstruction kicks in.
Capital investment dropped 0.9 percent in the first quarter, the first decline in six quarters, today’s data showed.
“It’s hard to think that companies will become aggressive about increasing business spending when uncertainties remain strong,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo.
Consumer spending fell 0.6 percent in the January-March period from the previous three months, the second straight quarter of declines, today’s report showed. In a sign that customers are returning to shops, nationwide department store sales fell 1.5 percent in April, easing from March’s 14.7 percent decline, a report today showed.
Highlighting the disaster’s effect on companies, Toyota Motor, the world’s largest carmaker, said last week that profit slumped 77 percent to the lowest in 1 1/2 years for the three months ended March 31. The earthquake forced it to halt production and depressed its domestic sales.
Nippon Steel Corp., Japan’s biggest steelmaker, said in April it posted a worse-than-expected loss in the fiscal fourth- quarter after the temblor damaged plants. The company’s output is expected to drop by 7 percent to 8 percent this quarter as damaged carmaker facilities damp orders.
http://www.bloomberg.com/news/2011-05-19/japan-s-economy-shrinks-more-than-forecast.html
Japan’s economy shrank more than estimated in the first quarter after the March 11 earthquake and tsunami disrupted production and prompted consumers to cut back spending, sending the nation to its third recession in a decade.
Gross domestic product contracted an annualized 3.7 percent in the three months through March, following a revised 3 percent drop in the previous quarter, the Cabinet Office said today in Tokyo. The median forecast of 23 economists surveyed by Bloomberg News was for a 1.9 percent drop.
The March disaster hit an economy already weighed down by years of deflation and subdued consumer spending, and slashed profits at companies including Toyota Motor Corp. as factories were shut. The economy, now the smallest size since 1991 unadjusted for price changes, may shrink further this quarter before rebounding later in 2011 as reconstruction kicks in.
Capital investment dropped 0.9 percent in the first quarter, the first decline in six quarters, today’s data showed.
“It’s hard to think that companies will become aggressive about increasing business spending when uncertainties remain strong,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo.
Consumer spending fell 0.6 percent in the January-March period from the previous three months, the second straight quarter of declines, today’s report showed. In a sign that customers are returning to shops, nationwide department store sales fell 1.5 percent in April, easing from March’s 14.7 percent decline, a report today showed.
Highlighting the disaster’s effect on companies, Toyota Motor, the world’s largest carmaker, said last week that profit slumped 77 percent to the lowest in 1 1/2 years for the three months ended March 31. The earthquake forced it to halt production and depressed its domestic sales.
Nippon Steel Corp., Japan’s biggest steelmaker, said in April it posted a worse-than-expected loss in the fiscal fourth- quarter after the temblor damaged plants. The company’s output is expected to drop by 7 percent to 8 percent this quarter as damaged carmaker facilities damp orders.
http://www.bloomberg.com/news/2011-05-19/japan-s-economy-shrinks-more-than-forecast.html
Wednesday, May 18, 2011
Charles Hugh Smith: The Domination of Government and the Decline of Self-Reliance and Community
From of two minds:
While the causal connections between the decline of community and TV, the Internet, two-earner households, suburban sprawl and long commutes, etc., are visible in a common-sense fashion, they miss the primary unspoken causal factor: the growing domination of the Central "Savior" State in every aspect of the economy and society.
From an anthropological or natural-selection point of view--i.e. one informed by sociobiology-- community and marriage alike are at root highly advantageous survival techniques: a group has far more resources than a similar number of isolated individuals, and offspring are more likely to survive and prosper if two parents are devoting resources to their upbringing rather than only one adult is carrying that burden.
In nations dominated by Savior States, there is less reason to invest in community or self-reliance, because the government handles everything.
We are constantly reassured that "there is plenty of money" for all the Savior State's vast (and ever-expanding) obligations, yet simple grade-school math calls all these happy assumptions into question. Even if we taxed the top 1% at a rate of 70%, that wouldn't be enough to fund the $100 trillion+ future obligations of Medicare, which rises inexorably by 6% a year even as the underlying economy grows at best at a rate of 2%.
Right now, as the 65 million-strong baby Boom generation has barely begun to retire, the nation is running a monumental deficit of $1.6 trillion (more if off-balance sheet borrowing is included), fully 12% of the nation's entire GDP. As I have documented here, Social Security is running deficits in 2011 that weren't supposed to occur until 2018.
http://www.oftwominds.com/blogmay11/govt-community-decline5-11.html
While the causal connections between the decline of community and TV, the Internet, two-earner households, suburban sprawl and long commutes, etc., are visible in a common-sense fashion, they miss the primary unspoken causal factor: the growing domination of the Central "Savior" State in every aspect of the economy and society.
From an anthropological or natural-selection point of view--i.e. one informed by sociobiology-- community and marriage alike are at root highly advantageous survival techniques: a group has far more resources than a similar number of isolated individuals, and offspring are more likely to survive and prosper if two parents are devoting resources to their upbringing rather than only one adult is carrying that burden.
In nations dominated by Savior States, there is less reason to invest in community or self-reliance, because the government handles everything.
We are constantly reassured that "there is plenty of money" for all the Savior State's vast (and ever-expanding) obligations, yet simple grade-school math calls all these happy assumptions into question. Even if we taxed the top 1% at a rate of 70%, that wouldn't be enough to fund the $100 trillion+ future obligations of Medicare, which rises inexorably by 6% a year even as the underlying economy grows at best at a rate of 2%.
Right now, as the 65 million-strong baby Boom generation has barely begun to retire, the nation is running a monumental deficit of $1.6 trillion (more if off-balance sheet borrowing is included), fully 12% of the nation's entire GDP. As I have documented here, Social Security is running deficits in 2011 that weren't supposed to occur until 2018.
http://www.oftwominds.com/blogmay11/govt-community-decline5-11.html
David Stockman: The U.S. at the Edge of a Solvency Crisis; A Rigged Bond Market Dominated by All the Central Banks
From Bloomberg:
The essential distinction is that we had a clean balance sheet then - $1 trillion of national debt. Today we have $14 trillion in national debt. We have used up all the runway, so to speak. We have piled our national balance sheet with so much debt that the government is at the very edge of a huge solvency crisis that isn't going to be addressed unless both parties dramatically change their position, and I see no sign of it. So we're going to have a gong show."
We have not had a two-way bond market. We have had a rigged market that has been dominated by not just the Fed, but all the central banks. Today over half of the $9 trillion in publicly-held debt is in central bank vaults. I call it the 'Monetary Roach Hotel.' Bonds go in and never come out. If the central banks stopped buying the debt, which will happen with the end of QE2, then we're going to get back into a real investor's market, a two-way market where some people don't believe that Congress and the White House have the capacity to deal with our problems. I think then we run the risk that we'll get real pricing on the debt, which has to be a lot more than 3%."
http://www.youtube.com/watch?v=yBtfktG3T2U&feature=player_embedded
The essential distinction is that we had a clean balance sheet then - $1 trillion of national debt. Today we have $14 trillion in national debt. We have used up all the runway, so to speak. We have piled our national balance sheet with so much debt that the government is at the very edge of a huge solvency crisis that isn't going to be addressed unless both parties dramatically change their position, and I see no sign of it. So we're going to have a gong show."
We have not had a two-way bond market. We have had a rigged market that has been dominated by not just the Fed, but all the central banks. Today over half of the $9 trillion in publicly-held debt is in central bank vaults. I call it the 'Monetary Roach Hotel.' Bonds go in and never come out. If the central banks stopped buying the debt, which will happen with the end of QE2, then we're going to get back into a real investor's market, a two-way market where some people don't believe that Congress and the White House have the capacity to deal with our problems. I think then we run the risk that we'll get real pricing on the debt, which has to be a lot more than 3%."
http://www.youtube.com/watch?v=yBtfktG3T2U&feature=player_embedded
Tuesday, May 17, 2011
Zero Hedge: Guest Post: Some Bubble Snapshots and Schizophrenic Five Year Plans
From Zero Hedge:
Despite governments dictating more loan-loss provisioning, China (and Korea and India) has little capital to assets. Loan growth and poor provisioning in China and India are giving off warning signs.
Asset quality is the crux of a bubble. Deteriorating asset quality creates balance sheet mismatches. Just as investors “reach for yield”, the first banks in on low quality loans show strong returns, so the whole banking sector joins in. Thus an imperfect indicator of declining asset quality is a high loans/total assets ratio. Vulnerability happens when loans season and NPLs creep up. Then banks need cash. When they don’t provision for losses you get a meltdown.
China, Korea, and India have extremely low capital provisioning for this contingency.
The Korean consumer sector looks shaky, although corporate balance sheets are much stronger and contribute to the high deposits to GDP in the first chart. A lot of Korean valuations are sky high and ready for a long drop.
http://www.zerohedge.com/article/guest-post-some-bubble-snapshots-and-schizophrenic-five-year-plans
Despite governments dictating more loan-loss provisioning, China (and Korea and India) has little capital to assets. Loan growth and poor provisioning in China and India are giving off warning signs.
Asset quality is the crux of a bubble. Deteriorating asset quality creates balance sheet mismatches. Just as investors “reach for yield”, the first banks in on low quality loans show strong returns, so the whole banking sector joins in. Thus an imperfect indicator of declining asset quality is a high loans/total assets ratio. Vulnerability happens when loans season and NPLs creep up. Then banks need cash. When they don’t provision for losses you get a meltdown.
China, Korea, and India have extremely low capital provisioning for this contingency.
The Korean consumer sector looks shaky, although corporate balance sheets are much stronger and contribute to the high deposits to GDP in the first chart. A lot of Korean valuations are sky high and ready for a long drop.
http://www.zerohedge.com/article/guest-post-some-bubble-snapshots-and-schizophrenic-five-year-plans
Richard Koo: Unwind of QE2 Could Lead to the Biggest Depression Yet
From his report:
Viewed objectively, the central banks are trying to push up asset prices using quantitative easing and the portfolio rebalancing effect. The resultant rise in asset prices based on this effect represented a potential bubble—or at least a liquidity-driven event—from the start. The question is whether the real economy can keep pace with asset prices formed in those liquidity-driven markets. If it cannot, higher asset prices will be considered a bubble and will collapse at some point. The resulting situation could be much more severe than if quantitative easing had never been implemented to begin with.
In other words, if stock and commodity prices are in fact in a bubble and if those bubbles were to collapse, the balance sheets of the financial institutions and hedge funds making investments with the expectation of higher asset prices could suffer heavy damage, exacerbating the balance sheet recession in the broader economy. an increase in DCF values, either.
http://www.scribd.com/doc/55664349/NMA-Koo-May17-2011
Viewed objectively, the central banks are trying to push up asset prices using quantitative easing and the portfolio rebalancing effect. The resultant rise in asset prices based on this effect represented a potential bubble—or at least a liquidity-driven event—from the start. The question is whether the real economy can keep pace with asset prices formed in those liquidity-driven markets. If it cannot, higher asset prices will be considered a bubble and will collapse at some point. The resulting situation could be much more severe than if quantitative easing had never been implemented to begin with.
In other words, if stock and commodity prices are in fact in a bubble and if those bubbles were to collapse, the balance sheets of the financial institutions and hedge funds making investments with the expectation of higher asset prices could suffer heavy damage, exacerbating the balance sheet recession in the broader economy. an increase in DCF values, either.
http://www.scribd.com/doc/55664349/NMA-Koo-May17-2011
Monday, May 16, 2011
Two Chinese Bond Auctions Fail Due To Tight Liquidity
From Business China:
The central bank scheduled the auction of RMB 20 billion worth of one-year treasury bonds and RMB 10 billion in six-month bonds on the country’s interbank bond market for May 13. But banks, faced with tight liquidity, only purchased RMB 11.71 billion worth of one-year bonds and RMB 9.63 billion worth of six-month bonds, the report said.
The reference yield of one-year treasury bonds was raised to 3.0246% from the previous issuance, while the bond yield of 182-day discounted treasury bonds was 2.91%, the paper said.
Tighter liquidity was behind the under-subscription, as the central bank resumed selling three-year notes on May 12 after a hiatus of more than five months, a bank analyst who was not named was cited as saying.
The central bank also raised banks’ RRRs by 0.5 percentage points on the same day, effective May 18, the fifth consecutive month its has raised RRRs this year.
http://en.21cbh.com/HTML/2011-5-16/RRR-Liquidity.html
The central bank scheduled the auction of RMB 20 billion worth of one-year treasury bonds and RMB 10 billion in six-month bonds on the country’s interbank bond market for May 13. But banks, faced with tight liquidity, only purchased RMB 11.71 billion worth of one-year bonds and RMB 9.63 billion worth of six-month bonds, the report said.
The reference yield of one-year treasury bonds was raised to 3.0246% from the previous issuance, while the bond yield of 182-day discounted treasury bonds was 2.91%, the paper said.
Tighter liquidity was behind the under-subscription, as the central bank resumed selling three-year notes on May 12 after a hiatus of more than five months, a bank analyst who was not named was cited as saying.
The central bank also raised banks’ RRRs by 0.5 percentage points on the same day, effective May 18, the fifth consecutive month its has raised RRRs this year.
http://en.21cbh.com/HTML/2011-5-16/RRR-Liquidity.html
IMF Organization Chart
From Zero Hedge:
With much interest focusing on the organizational structure of the IMF, today Reuters has compiled a useful org chart summarizing the complete flow of executive power at the Washington D.C.-based (for now) developing world (and PIIGS, soon everyone else) rescue organization.
http://www.zerohedge.com/article/summary-imf-org-chart
With much interest focusing on the organizational structure of the IMF, today Reuters has compiled a useful org chart summarizing the complete flow of executive power at the Washington D.C.-based (for now) developing world (and PIIGS, soon everyone else) rescue organization.
http://www.zerohedge.com/article/summary-imf-org-chart
U.S. Treasury Bill Rates Near Record Low; China’s U.S. Treasury Holdings Decline
From Bloomberg:
Treasury bill rates were at almost record lows as the U.S. reached its federal borrowing threshold and a congressional vote loomed in the next few months on raising the nation’s $14.3 trillion limit.
Six-month rates were at 0.07 percent, compared with the record low 0.0305 percent set on May 7, as Treasury Secretary Timothy F. Geithner said he has taken action to stave off the federal debt limit until Aug. 2, using accounting measures that involve two retirement funds. Three-month bill rates were at 0.02 percent, almost the lowest level since they went negative during the financial crisis.
“The debt ceiling issue continues to keep bill rates remarkably low,” said Ian Lyngen, a government bond strategist at CRT Capital Group LLC in Stamford, Connecticut. “With the cuts in issuance for short-term securities. demand for paper in the front end demand remains firm for bills.”
Geithner wrote lawmakers today to say he has declared a “debt issuance suspension period,” a technical measure that allows him to free up borrowing room from the Civil Service Retirement and Disability Fund and the Government Securities Investment Fund. The steps, which come as Republicans and Democrats argue over when and how to raise the debt limit, won’t affect retirees or government operations.
Since the government shut down non-essential services in 1995, the borrowing threshold has been increased 12 times. In half of those instances, Congress waited until the ceiling had been reached before it was adjusted.
http://www.bloomberg.com/news/2011-05-16/treasury-bill-rates-at-almost-record-low-as-u-s-debt-ceiling-is-reached.html
From Zero Hedge:
At 9 am, Treasury released its March TIC (international funds flow) data. While the headline number of $116 billion in total net TIC flows was slightly higher than February at $116.0 billion compared to $97.7 previously, the net number (offset by US transactions in foreign securities) missed expectations of $33 billion, printing at $24 billion. Notably, of the $116 billion in foreign flows into US securities, foreign central banks were ($10) billion (and privates were $126 billion), indicating that the central banker cartel may be in need of some additional funding soon. Net foreign purchases of long-term U.S. securities were $54.7 billion. Of this, net purchases by private foreign investors were $44.9 billion, and net purchases by foreign official institutions were $9.9 billion. Foreign holdings of dollar-denominated short-term U.S. securities, including U.S. Treasury bills and other custody liabilities, decreased $18.3 billion. Foreign holdings of U.S. Treasury bills decreased $21.9 billion. And while we will provide a full breakdown later in the day, the key trend in US paper holdings continues to be China, whose total US debt holdings dropped for the 5th consecutive month in a row at $1144.9 billion, and the largest one month decline since November 2010.
http://www.zerohedge.com/article/chinese-treasury-holdings-decline-fifth-month-row-biggest-drop-november-2010
Treasury bill rates were at almost record lows as the U.S. reached its federal borrowing threshold and a congressional vote loomed in the next few months on raising the nation’s $14.3 trillion limit.
Six-month rates were at 0.07 percent, compared with the record low 0.0305 percent set on May 7, as Treasury Secretary Timothy F. Geithner said he has taken action to stave off the federal debt limit until Aug. 2, using accounting measures that involve two retirement funds. Three-month bill rates were at 0.02 percent, almost the lowest level since they went negative during the financial crisis.
“The debt ceiling issue continues to keep bill rates remarkably low,” said Ian Lyngen, a government bond strategist at CRT Capital Group LLC in Stamford, Connecticut. “With the cuts in issuance for short-term securities. demand for paper in the front end demand remains firm for bills.”
Geithner wrote lawmakers today to say he has declared a “debt issuance suspension period,” a technical measure that allows him to free up borrowing room from the Civil Service Retirement and Disability Fund and the Government Securities Investment Fund. The steps, which come as Republicans and Democrats argue over when and how to raise the debt limit, won’t affect retirees or government operations.
Since the government shut down non-essential services in 1995, the borrowing threshold has been increased 12 times. In half of those instances, Congress waited until the ceiling had been reached before it was adjusted.
http://www.bloomberg.com/news/2011-05-16/treasury-bill-rates-at-almost-record-low-as-u-s-debt-ceiling-is-reached.html
From Zero Hedge:
At 9 am, Treasury released its March TIC (international funds flow) data. While the headline number of $116 billion in total net TIC flows was slightly higher than February at $116.0 billion compared to $97.7 previously, the net number (offset by US transactions in foreign securities) missed expectations of $33 billion, printing at $24 billion. Notably, of the $116 billion in foreign flows into US securities, foreign central banks were ($10) billion (and privates were $126 billion), indicating that the central banker cartel may be in need of some additional funding soon. Net foreign purchases of long-term U.S. securities were $54.7 billion. Of this, net purchases by private foreign investors were $44.9 billion, and net purchases by foreign official institutions were $9.9 billion. Foreign holdings of dollar-denominated short-term U.S. securities, including U.S. Treasury bills and other custody liabilities, decreased $18.3 billion. Foreign holdings of U.S. Treasury bills decreased $21.9 billion. And while we will provide a full breakdown later in the day, the key trend in US paper holdings continues to be China, whose total US debt holdings dropped for the 5th consecutive month in a row at $1144.9 billion, and the largest one month decline since November 2010.
http://www.zerohedge.com/article/chinese-treasury-holdings-decline-fifth-month-row-biggest-drop-november-2010
Friday, May 13, 2011
Matt Taibbi: The People vs. Goldman Sachs
From Rolling Stone:
A Senate committee has laid out the evidence. Now the Justice Department should bring criminal charges.
They weren't murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it.
Thanks to an extraordinary investigative effort by a Senate subcommittee that unilaterally decided to take up the burden the criminal justice system has repeatedly refused to shoulder, we now know exactly what Goldman Sachs executives like Lloyd Blankfein and Daniel Sparks lied about. We know exactly how they and other top Goldman executives, including David Viniar and Thomas Montag, defrauded their clients. America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn't leave much doubt: Goldman Sachs should stand trial.
The great and powerful Oz of Wall Street was not the only target of Wall Street and the Financial Crisis: Anatomy of a Financial Collapse, the 650-page report just released by the Senate Subcommittee on Investigations, chaired by Democrat Carl Levin of Michigan, alongside Republican Tom Coburn of Oklahoma. Their unusually scathing bipartisan report also includes case studies of Washington Mutual and Deutsche Bank, providing a panoramic portrait of a bubble era that produced the most destructive crime spree in our history — "a million fraud cases a year" is how one former regulator puts it. But the mountain of evidence collected against Goldman by Levin's small, 15-desk office of investigators — details of gross, baldfaced fraud delivered up in such quantities as to almost serve as a kind of sarcastic challenge to the curiously impassive Justice Department — stands as the most important symbol of Wall Street's aristocratic impunity and prosecutorial immunity produced since the crash of 2008.
To date, there has been only one successful prosecution of a financial big fish from the mortgage bubble, and that was Lee Farkas, a Florida lender who was just convicted on a smorgasbord of fraud charges and now faces life in prison. But Farkas, sadly, is just an exception proving the rule: Like Bernie Madoff, his comically excessive crime spree (which involved such lunacies as kiting checks to his own bank and selling loans that didn't exist) was almost completely unconnected to the systematic corruption that led to the crisis. What's more, many of the earlier criminals in the chain of corruption — from subprime lenders like Countrywide, who herded old ladies and ghetto families into bad loans, to rapacious banks like Washington Mutual, who pawned off fraudulent mortgages on investors — wound up going belly up, sunk by their own greed.
But Goldman, as the Levin report makes clear, remains an ascendant company precisely because it used its canny perception of an upcoming disaster (one which it helped create, incidentally) as an opportunity to enrich itself, not only at the expense of clients but ultimately, through the bailouts and the collateral damage of the wrecked economy, at the expense of society. The bank seemed to count on the unwillingness or inability of federal regulators to stop them — and when called to Washington last year to explain their behavior, Goldman executives brazenly misled Congress, apparently confident that their perjury would carry no serious consequences. Thus, while much of the Levin report describes past history, the Goldman section describes an ongoing? crime — a powerful, well-connected firm, with the ear of the president and the Treasury, that appears to have conquered the entire regulatory structure and stands now on the precipice of officially getting away with one of the biggest financial crimes in history.
Defenders of Goldman have been quick to insist that while the bank may have had a few ethical slips here and there, its only real offense was being too good at making money. We now know, unequivocally, that this is bullshit. Goldman isn't a pudgy housewife who broke her diet with a few Nilla Wafers between meals — it's an advanced-stage, 1,100-pound medical emergency who hasn't left his apartment in six years, and is found by paramedics buried up to his eyes in cupcake wrappers and pizza boxes. If the evidence in the Levin report is ignored, then Goldman will have achieved a kind of corrupt-enterprise nirvana. Caught, but still free: above the law.
When it came time for Goldman CEO Lloyd Blankfein to testify, the banker hedged and stammered like a brain-addled boxer who couldn't quite follow the questions. When Levin asked how Blankfein felt about the fact that Goldman collected $13 billion from U.S. taxpayers through the AIG bailout, the CEO deflected over and over, insisting that Goldman would somehow have made that money anyway through its private insurance policies on AIG. When Levin pressed Blankfein, pointing out that he hadn't answered the question, Blankfein simply peered at Levin like he didn't understand.
This isn't just a matter of a few seedy guys stealing a few bucks. This is America: Corporate stealing is practically the national pastime, and Goldman Sachs is far from the only company to get away with doing it. But the prominence of this bank and the high-profile nature of its confrontation with a powerful Senate committee makes this a political story as well. If the Justice Department fails to give the American people a chance to judge this case — if Goldman skates without so much as a trial — it will confirm once and for all the embarrassing truth: that the law in America is subjective, and crime is defined not by what you did, but by who you are.
http://www.rollingstone.com/politics/news/the-people-vs-goldman-sachs-20110511
A Senate committee has laid out the evidence. Now the Justice Department should bring criminal charges.
They weren't murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it.
Thanks to an extraordinary investigative effort by a Senate subcommittee that unilaterally decided to take up the burden the criminal justice system has repeatedly refused to shoulder, we now know exactly what Goldman Sachs executives like Lloyd Blankfein and Daniel Sparks lied about. We know exactly how they and other top Goldman executives, including David Viniar and Thomas Montag, defrauded their clients. America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn't leave much doubt: Goldman Sachs should stand trial.
The great and powerful Oz of Wall Street was not the only target of Wall Street and the Financial Crisis: Anatomy of a Financial Collapse, the 650-page report just released by the Senate Subcommittee on Investigations, chaired by Democrat Carl Levin of Michigan, alongside Republican Tom Coburn of Oklahoma. Their unusually scathing bipartisan report also includes case studies of Washington Mutual and Deutsche Bank, providing a panoramic portrait of a bubble era that produced the most destructive crime spree in our history — "a million fraud cases a year" is how one former regulator puts it. But the mountain of evidence collected against Goldman by Levin's small, 15-desk office of investigators — details of gross, baldfaced fraud delivered up in such quantities as to almost serve as a kind of sarcastic challenge to the curiously impassive Justice Department — stands as the most important symbol of Wall Street's aristocratic impunity and prosecutorial immunity produced since the crash of 2008.
To date, there has been only one successful prosecution of a financial big fish from the mortgage bubble, and that was Lee Farkas, a Florida lender who was just convicted on a smorgasbord of fraud charges and now faces life in prison. But Farkas, sadly, is just an exception proving the rule: Like Bernie Madoff, his comically excessive crime spree (which involved such lunacies as kiting checks to his own bank and selling loans that didn't exist) was almost completely unconnected to the systematic corruption that led to the crisis. What's more, many of the earlier criminals in the chain of corruption — from subprime lenders like Countrywide, who herded old ladies and ghetto families into bad loans, to rapacious banks like Washington Mutual, who pawned off fraudulent mortgages on investors — wound up going belly up, sunk by their own greed.
But Goldman, as the Levin report makes clear, remains an ascendant company precisely because it used its canny perception of an upcoming disaster (one which it helped create, incidentally) as an opportunity to enrich itself, not only at the expense of clients but ultimately, through the bailouts and the collateral damage of the wrecked economy, at the expense of society. The bank seemed to count on the unwillingness or inability of federal regulators to stop them — and when called to Washington last year to explain their behavior, Goldman executives brazenly misled Congress, apparently confident that their perjury would carry no serious consequences. Thus, while much of the Levin report describes past history, the Goldman section describes an ongoing? crime — a powerful, well-connected firm, with the ear of the president and the Treasury, that appears to have conquered the entire regulatory structure and stands now on the precipice of officially getting away with one of the biggest financial crimes in history.
Defenders of Goldman have been quick to insist that while the bank may have had a few ethical slips here and there, its only real offense was being too good at making money. We now know, unequivocally, that this is bullshit. Goldman isn't a pudgy housewife who broke her diet with a few Nilla Wafers between meals — it's an advanced-stage, 1,100-pound medical emergency who hasn't left his apartment in six years, and is found by paramedics buried up to his eyes in cupcake wrappers and pizza boxes. If the evidence in the Levin report is ignored, then Goldman will have achieved a kind of corrupt-enterprise nirvana. Caught, but still free: above the law.
When it came time for Goldman CEO Lloyd Blankfein to testify, the banker hedged and stammered like a brain-addled boxer who couldn't quite follow the questions. When Levin asked how Blankfein felt about the fact that Goldman collected $13 billion from U.S. taxpayers through the AIG bailout, the CEO deflected over and over, insisting that Goldman would somehow have made that money anyway through its private insurance policies on AIG. When Levin pressed Blankfein, pointing out that he hadn't answered the question, Blankfein simply peered at Levin like he didn't understand.
This isn't just a matter of a few seedy guys stealing a few bucks. This is America: Corporate stealing is practically the national pastime, and Goldman Sachs is far from the only company to get away with doing it. But the prominence of this bank and the high-profile nature of its confrontation with a powerful Senate committee makes this a political story as well. If the Justice Department fails to give the American people a chance to judge this case — if Goldman skates without so much as a trial — it will confirm once and for all the embarrassing truth: that the law in America is subjective, and crime is defined not by what you did, but by who you are.
http://www.rollingstone.com/politics/news/the-people-vs-goldman-sachs-20110511
NHK: Fukushima Reactor 1 Is In a “Meltdown” State
From NHK:
Tokyo Electric Power Company says the No.1 reactor at the Fukushima Daiichi nuclear power plant is believed to be in a state of "meltdown".
The utility company said on Thursday that most of the fuel rods are likely to have melted and fallen to the bottom of the reactor. Earlier in the day, it found that the coolant water in the reactor is at a level which would completely expose nuclear fuel rods if they were in their normal position.
The company believes the melted fuel has cooled down, judging from the reactor's surface temperature.
But it suspects the meltdown created a hole or holes in the bottom of the reactor causing water to leak into the containment vessel.
It also suspects the water is leaking into the reactor building.
The company is planning to fully fill the containment vessel with water by increasing the amount injected.
The company says, however, it must review the plan in light of the latest finding.
http://www3.nhk.or.jp/daily/english/13_03.html
Tokyo Electric Power Company says the No.1 reactor at the Fukushima Daiichi nuclear power plant is believed to be in a state of "meltdown".
The utility company said on Thursday that most of the fuel rods are likely to have melted and fallen to the bottom of the reactor. Earlier in the day, it found that the coolant water in the reactor is at a level which would completely expose nuclear fuel rods if they were in their normal position.
The company believes the melted fuel has cooled down, judging from the reactor's surface temperature.
But it suspects the meltdown created a hole or holes in the bottom of the reactor causing water to leak into the containment vessel.
It also suspects the water is leaking into the reactor building.
The company is planning to fully fill the containment vessel with water by increasing the amount injected.
The company says, however, it must review the plan in light of the latest finding.
http://www3.nhk.or.jp/daily/english/13_03.html
Wednesday, May 11, 2011
China: Inflation Up, Economy Down
Again, China is the largest trading partner of Korea. China’s inflationary spiral has significant implications for Korea.
From Bloomberg:
China’s inflation held above 5 percent in April and lending exceeded analysts’ estimates, signaling that further monetary tightening may be needed to cool the fastest-growing major economy.
Consumer prices rose 5.3 percent from a year earlier and banks extended 740 billion yuan ($114 billion) of local-currency loans, according to reports from the statistics bureau and central bank. Weaker industrial-output growth, also reported today, may diminish price pressures in coming months.
Today’s data showed that inflation has exceeded Premier Wen Jiabao’s 4 percent target each month this year. The figures may buttress the case made by U.S. Treasury Secretary Timothy F. Geithner in annual bilateral talks in Washington this week that China needs a stronger yuan to contain prices and spur domestic demand.
Today’s report showed a 25.4 percent increase in fixed- asset investment in the first four months of the year. That figure, combined with a report yesterday showing record export shipments in April, indicates the world’s second-biggest economy has made limited progress in shifting to a growth model more driven by domestic demand.
“The data looks bad,” said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong. “The economy is slowing more sharply than expected but inflation is not.”
Inflation is “the most pressing problem” facing China, Vice Premier Wang Qishan said at the Washington talks.
http://www.bloomberg.com/news/2011-05-11/china-inflation-over-5-signals-officials-may-boost-yuan-interest-rates.html
From Bloomberg:
China’s inflation held above 5 percent in April and lending exceeded analysts’ estimates, signaling that further monetary tightening may be needed to cool the fastest-growing major economy.
Consumer prices rose 5.3 percent from a year earlier and banks extended 740 billion yuan ($114 billion) of local-currency loans, according to reports from the statistics bureau and central bank. Weaker industrial-output growth, also reported today, may diminish price pressures in coming months.
Today’s data showed that inflation has exceeded Premier Wen Jiabao’s 4 percent target each month this year. The figures may buttress the case made by U.S. Treasury Secretary Timothy F. Geithner in annual bilateral talks in Washington this week that China needs a stronger yuan to contain prices and spur domestic demand.
Today’s report showed a 25.4 percent increase in fixed- asset investment in the first four months of the year. That figure, combined with a report yesterday showing record export shipments in April, indicates the world’s second-biggest economy has made limited progress in shifting to a growth model more driven by domestic demand.
“The data looks bad,” said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong. “The economy is slowing more sharply than expected but inflation is not.”
Inflation is “the most pressing problem” facing China, Vice Premier Wang Qishan said at the Washington talks.
http://www.bloomberg.com/news/2011-05-11/china-inflation-over-5-signals-officials-may-boost-yuan-interest-rates.html
Tuesday, May 10, 2011
다섯 아이 입양한 벤처기업 사장
그 동안 그룹홈, 장애인 시설 등에서 봉사활동을 다니면서 느끼는 점은 역시 이 아이들에게 정상적인 가정의 울타리를 제공 해 주는 것이 가장 큰 사랑이라는 것이다. 이분의 가정에 하나님의 특별한 은총이 함께 하시기를 기원한다.
한국경제 신문으로부터:
경기도 성남시 분당에 살고 있는 김덕근 코모텍 대표(54)는 아들 부자다. 올해 중학교에 입학한 대원(14)과 초등학생인 대철(12) • 대건(7),유치원생인 기현(5)과 세 살 난 윤기(3)까지 모두 다섯이다. 김씨는 처음엔 딸 부자였다. 큰딸 수련(26)과 둘째딸 수지(19)는 이미 장성해 각각 화가와 패션 디자이너의 길을 걷고 있다.
사실 대원부터 윤기까지 아들들은 모두 배가 아닌 가슴으로 낳았다. 일부러 아들만 골라 입양한 건 아니다. 현실적으로 입양 부모들이 아들보다는 딸을 더 선호하다 보니 사내아이들은 좋은 부모를 찾기가 어렵다.
김 대표는 11일 '제6회 입양의 날'을 맞아 국무총리 표창을 받는다. 1999년부터 5명의 사내아이를 입양해 키우고 있는데다 연장아(만 1세 이후 입양되는 아동) 입양부모 모임을 이끌며 입양에 대한 사회적 인식 개선을 위해 노력한 점 등을 인정받았다.
서울대 전기공학 박사 출신으로 삼성전기에서 정밀모터팀장까지 지냈던 그는 1990년대 중반만 해도 사회적 성공이 지상 과제였다. 1997년 말에는 샐러리맨의 꿈인 창업도 이뤄냈다. 첨단모터 제조업체인 코모텍을 세운 것이다. 그랬던 그가 '함께 사는 삶'에 관심을 갖게 된 것은 충북 음성 꽃동네를 다녀온 뒤부터다.
창업 초반 아내의 권유로 가톨릭 신자가 된 이후 꽃동네를 다니며 오웅진 신부의 강의를 듣고 봉사활동도 했다. 그 때 성공을 위해 뛰는 삶만이 꼭 정답은 아니라는 깨달음을 얻었다.
회사가 어느 정도 자리 잡힌 1999년 말 김 대표는 대철을 입양했다. 평소 잘 알고 지내던 수녀님이 한 아이의 입양가정을 좀 알아봐달라고 부탁했지만 나서는 이가 없었다. 미혼모의 아들로 생후 2개월째라는 대철 얘기를 듣고 다음날 아내와 직접 보러갔다. 부부는 그 아이가 김 대표를 꼭 빼닮았다고 생각했다. 대철은 놀이터에서 놀다가 코뼈가 부러지고 축구하면서 발이 부러지는 등 부모 속도 꽤나 썩였다.
김 대표는 신기했다. "변화되는 모습을 보면 오히려 저나 아내에게도 많은 깨달음을 줍니다. "두 딸의 전폭적인 지원도 한몫했다. 올해 입양을 결정한 기현과 윤기도 큰딸이 먼저 입양하자고 나섰다.
아이들과 함께 회사도 쑥쑥 커 나갔다. 작년 매출 100억원,순이익 21억원으로 탄탄한 성장가도를 달리고 있다. 삼성전자 LIG 삼성중공업 현대자동차 두산인프라코어 등 대기업들과 공동연구 및 납품 등 거래 관계를 유지하고 있다.
http://www.hankyung.com/news/app/newsview.php?aid=2011051085241
한국경제 신문으로부터:
경기도 성남시 분당에 살고 있는 김덕근 코모텍 대표(54)는 아들 부자다. 올해 중학교에 입학한 대원(14)과 초등학생인 대철(12) • 대건(7),유치원생인 기현(5)과 세 살 난 윤기(3)까지 모두 다섯이다. 김씨는 처음엔 딸 부자였다. 큰딸 수련(26)과 둘째딸 수지(19)는 이미 장성해 각각 화가와 패션 디자이너의 길을 걷고 있다.
사실 대원부터 윤기까지 아들들은 모두 배가 아닌 가슴으로 낳았다. 일부러 아들만 골라 입양한 건 아니다. 현실적으로 입양 부모들이 아들보다는 딸을 더 선호하다 보니 사내아이들은 좋은 부모를 찾기가 어렵다.
김 대표는 11일 '제6회 입양의 날'을 맞아 국무총리 표창을 받는다. 1999년부터 5명의 사내아이를 입양해 키우고 있는데다 연장아(만 1세 이후 입양되는 아동) 입양부모 모임을 이끌며 입양에 대한 사회적 인식 개선을 위해 노력한 점 등을 인정받았다.
서울대 전기공학 박사 출신으로 삼성전기에서 정밀모터팀장까지 지냈던 그는 1990년대 중반만 해도 사회적 성공이 지상 과제였다. 1997년 말에는 샐러리맨의 꿈인 창업도 이뤄냈다. 첨단모터 제조업체인 코모텍을 세운 것이다. 그랬던 그가 '함께 사는 삶'에 관심을 갖게 된 것은 충북 음성 꽃동네를 다녀온 뒤부터다.
창업 초반 아내의 권유로 가톨릭 신자가 된 이후 꽃동네를 다니며 오웅진 신부의 강의를 듣고 봉사활동도 했다. 그 때 성공을 위해 뛰는 삶만이 꼭 정답은 아니라는 깨달음을 얻었다.
회사가 어느 정도 자리 잡힌 1999년 말 김 대표는 대철을 입양했다. 평소 잘 알고 지내던 수녀님이 한 아이의 입양가정을 좀 알아봐달라고 부탁했지만 나서는 이가 없었다. 미혼모의 아들로 생후 2개월째라는 대철 얘기를 듣고 다음날 아내와 직접 보러갔다. 부부는 그 아이가 김 대표를 꼭 빼닮았다고 생각했다. 대철은 놀이터에서 놀다가 코뼈가 부러지고 축구하면서 발이 부러지는 등 부모 속도 꽤나 썩였다.
김 대표는 신기했다. "변화되는 모습을 보면 오히려 저나 아내에게도 많은 깨달음을 줍니다. "두 딸의 전폭적인 지원도 한몫했다. 올해 입양을 결정한 기현과 윤기도 큰딸이 먼저 입양하자고 나섰다.
아이들과 함께 회사도 쑥쑥 커 나갔다. 작년 매출 100억원,순이익 21억원으로 탄탄한 성장가도를 달리고 있다. 삼성전자 LIG 삼성중공업 현대자동차 두산인프라코어 등 대기업들과 공동연구 및 납품 등 거래 관계를 유지하고 있다.
http://www.hankyung.com/news/app/newsview.php?aid=2011051085241
Monday, May 9, 2011
David Stockman: It Will Take a Major Dislocation in the Bond Market to Wake Up the U.S.
David Stockman, former budget director in the Reagan administration, talks about the U.S. fiscal policy.
As he points out, the U.S. policies will have worldwide impact over time.
From Bloomberg:
I think the people would respond if they knew the fact, and if they'd been were told the truth, but they haven't been, they've been lied to for the last 10-20 years by both sides saying that we can live beyond our means, new entitlements, new tax cuts constantly, tax stimulus for everything that we could imagine, and as a result of that the country doesn't know that sacrifice is going to be required, and that everyone is going to have to give up something.
I think it's going to take a major dislocation in the bond market, a real conflaguration on the part of the people who have to buy this debt, before the country wakes up.
http://www.bloomberg.com/video/69402400/#ooid=pkNnJmMjoakJlPBtrtACxqMkGNvUoUaB
As he points out, the U.S. policies will have worldwide impact over time.
From Bloomberg:
I think the people would respond if they knew the fact, and if they'd been were told the truth, but they haven't been, they've been lied to for the last 10-20 years by both sides saying that we can live beyond our means, new entitlements, new tax cuts constantly, tax stimulus for everything that we could imagine, and as a result of that the country doesn't know that sacrifice is going to be required, and that everyone is going to have to give up something.
I think it's going to take a major dislocation in the bond market, a real conflaguration on the part of the people who have to buy this debt, before the country wakes up.
http://www.bloomberg.com/video/69402400/#ooid=pkNnJmMjoakJlPBtrtACxqMkGNvUoUaB
NIA on the U.S. College Bubble
From NIA press release:
The current college education bubble is one of the largest bubbles in U.S. history. The college bubble has been fueled by the U.S. government's willingness to give out cheap and easy student loans to anybody who applied for them, regardless of if they will ever have the ability to pay the loans back. Student loan debt in America is now larger than credit card debt, but unlike credit card debt, student loan debt can't be discharged in bankruptcy.
http://inflation.us/collegebubbleburst.html
The current college education bubble is one of the largest bubbles in U.S. history. The college bubble has been fueled by the U.S. government's willingness to give out cheap and easy student loans to anybody who applied for them, regardless of if they will ever have the ability to pay the loans back. Student loan debt in America is now larger than credit card debt, but unlike credit card debt, student loan debt can't be discharged in bankruptcy.
http://inflation.us/collegebubbleburst.html
Is China Poised to Repeat Japan’s Recession Experience in the 1990s?
From Worldcrunch:
Based on the data of the 2000 census as well as the new census, China’s comprehensive national strength, from the viewpoint of its demographic structure, is currently at a historical peak. The working-age group of those 15-64 years, has reached almost 1 billion people, an all-time high, with the elderly dependency ratio less than 12%, and the general elderly dependency (ratio of the non-labor population to labor population) only 34%. In other words, China has never been less burdened by a non-labor population.
But again from the viewpoint of the demographical structure, China is set to repeat Japan’s economic recession experience of the 1990s. The difference is Japan became rich before growing old, while China is growing old before even getting rich. The average GDP of Japan today is above $40,000, while it is still just $4,000 in China.
Also, perhaps more importantly, China’s labor age group of the 15-64 years old will reach its peak in 2013, and then start to decrease. Changes to the 19-22 years old age group are key to a country’s demographic health, because they are the most active part of the population and what business needs most. In 2009, this age group attained an historical high of 100 million but will rapidly decrease to 58 million by 2019, a drop of 43% over just 10 years.
http://www.worldcrunch.com/china-cooking-books-its-census-data/3017
Based on the data of the 2000 census as well as the new census, China’s comprehensive national strength, from the viewpoint of its demographic structure, is currently at a historical peak. The working-age group of those 15-64 years, has reached almost 1 billion people, an all-time high, with the elderly dependency ratio less than 12%, and the general elderly dependency (ratio of the non-labor population to labor population) only 34%. In other words, China has never been less burdened by a non-labor population.
But again from the viewpoint of the demographical structure, China is set to repeat Japan’s economic recession experience of the 1990s. The difference is Japan became rich before growing old, while China is growing old before even getting rich. The average GDP of Japan today is above $40,000, while it is still just $4,000 in China.
Also, perhaps more importantly, China’s labor age group of the 15-64 years old will reach its peak in 2013, and then start to decrease. Changes to the 19-22 years old age group are key to a country’s demographic health, because they are the most active part of the population and what business needs most. In 2009, this age group attained an historical high of 100 million but will rapidly decrease to 58 million by 2019, a drop of 43% over just 10 years.
http://www.worldcrunch.com/china-cooking-books-its-census-data/3017
Irish Economist Morgan Kelly: Ireland's Future Depends on Breaking Free from Bailout
One can see how outside forces have affected the Irish economy and its ordinary citizens.
Morgan Kelly is professor of economics at University college Dublin.
From Irish Times:
Ireland is heading for bankruptcy, which would be catastrophic for a country that trades on its reputation as a safe place to do business, writes Morgan Kelly
with the Irish Government on track to owe a quarter of a trillion euro by 2014, a prolonged and chaotic national bankruptcy is becoming inevitable. By the time the dust settles, Ireland’s last remaining asset, its reputation as a safe place from which to conduct business, will have been destroyed.
On November 16th, European finance ministers urged [finance minister Brian] Lenihan to accept a bailout to stop the panic spreading to Spain and Portugal, but he refused, arguing that the Irish government was funded until the following summer. Although attacked by the Irish media for this seemingly delusional behaviour, Lenihan, for once, was doing precisely the right thing. Behind Lenihan’s refusal lay the thinly veiled threat that, unless given suitably generous terms, Ireland could hold happily its breath for long enough that Spain and Portugal, who needed to borrow every month, would drown….
Ireland’s Last Stand began less shambolically than you might expect. The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: “You are Ireland’s salvation.”
The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are.
The negotiations went downhill from there. On one side was the European Central Bank, unabashedly representing Ireland’s creditors and insisting on full repayment of bank bonds. On the other was the IMF, arguing that Irish taxpayers would be doing well to balance their government’s books, let alone repay the losses of private banks. And the Irish? On the side of the ECB, naturally.
In the circumstances, the ECB walked away with everything it wanted. The IMF were scathing of the Irish performance, with one staffer describing the eagerness of some Irish negotiators to side with the ECB as displaying strong elements of Stockholm Syndrome.
The one thing you need to understand about the Irish bailout is that it had nothing to do with repairing Ireland’s finances enough to allow the Irish Government to start borrowing again in the bond markets at reasonable rates: what people ordinarily think of a bailout as doing.
The finances of the Irish Government are like a bucket with a large hole in the form of the banking system. While any half-serious rescue would have focused on plugging this hole, the agreed bailout ostentatiously ignored the banks, except for reiterating the ECB-Honohan view that their losses would be borne by Irish taxpayers. Try to imagine the Bank of England’s insisting that Northern Rock be rescued by Newcastle City Council and you have some idea of how seriously the ECB expects the Irish bailout to work.
http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html
Morgan Kelly is professor of economics at University college Dublin.
From Irish Times:
Ireland is heading for bankruptcy, which would be catastrophic for a country that trades on its reputation as a safe place to do business, writes Morgan Kelly
with the Irish Government on track to owe a quarter of a trillion euro by 2014, a prolonged and chaotic national bankruptcy is becoming inevitable. By the time the dust settles, Ireland’s last remaining asset, its reputation as a safe place from which to conduct business, will have been destroyed.
On November 16th, European finance ministers urged [finance minister Brian] Lenihan to accept a bailout to stop the panic spreading to Spain and Portugal, but he refused, arguing that the Irish government was funded until the following summer. Although attacked by the Irish media for this seemingly delusional behaviour, Lenihan, for once, was doing precisely the right thing. Behind Lenihan’s refusal lay the thinly veiled threat that, unless given suitably generous terms, Ireland could hold happily its breath for long enough that Spain and Portugal, who needed to borrow every month, would drown….
Ireland’s Last Stand began less shambolically than you might expect. The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: “You are Ireland’s salvation.”
The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are.
The negotiations went downhill from there. On one side was the European Central Bank, unabashedly representing Ireland’s creditors and insisting on full repayment of bank bonds. On the other was the IMF, arguing that Irish taxpayers would be doing well to balance their government’s books, let alone repay the losses of private banks. And the Irish? On the side of the ECB, naturally.
In the circumstances, the ECB walked away with everything it wanted. The IMF were scathing of the Irish performance, with one staffer describing the eagerness of some Irish negotiators to side with the ECB as displaying strong elements of Stockholm Syndrome.
The one thing you need to understand about the Irish bailout is that it had nothing to do with repairing Ireland’s finances enough to allow the Irish Government to start borrowing again in the bond markets at reasonable rates: what people ordinarily think of a bailout as doing.
The finances of the Irish Government are like a bucket with a large hole in the form of the banking system. While any half-serious rescue would have focused on plugging this hole, the agreed bailout ostentatiously ignored the banks, except for reiterating the ECB-Honohan view that their losses would be borne by Irish taxpayers. Try to imagine the Bank of England’s insisting that Northern Rock be rescued by Newcastle City Council and you have some idea of how seriously the ECB expects the Irish bailout to work.
http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html
Sunday, May 8, 2011
“Mary Magdalene and the other Mary went away quickly from the tomb, fearful yet overjoyed, and ran to announce the good news to his disciples. And behold, Jesus met them on their way and greeted them. They approached, embraced his feet, and did him homage. Then Jesus said to them, ‘Do not be afraid.’”
Matthew 28: 8-10
이 공간을 방문해 주시는 regular reader 중에는 이미 2008년 리먼 사태 이전에 미국 경제가 심한 중병에 걸려있다는 것을 알고 계셨다. 또 지난 근 3년간 전세계 경제 상황이 어떤 식으로 전개되고 있다는 것도 잘 알고 계시리라. 아직 우리는 초기 단계에 있을 뿐이라는 것도.
어려운 시기를 겪으면서 많은 것도 얻고 있지 않은가. 그 중 significant한 것은 온전히 하나님께 내어드려야 한다는 것, 아주 작은 일에도 감사하면서, 겸허히, 겸손하게 인도하시는 대로 따라야 한다는 것이다.
건강도 그렇다. 우리에게 주어진 시간 동안 기쁘게, 기도하면서 the paths of God를 모두 함께 걸어가야 하리라.
Matthew 28: 8-10
이 공간을 방문해 주시는 regular reader 중에는 이미 2008년 리먼 사태 이전에 미국 경제가 심한 중병에 걸려있다는 것을 알고 계셨다. 또 지난 근 3년간 전세계 경제 상황이 어떤 식으로 전개되고 있다는 것도 잘 알고 계시리라. 아직 우리는 초기 단계에 있을 뿐이라는 것도.
어려운 시기를 겪으면서 많은 것도 얻고 있지 않은가. 그 중 significant한 것은 온전히 하나님께 내어드려야 한다는 것, 아주 작은 일에도 감사하면서, 겸허히, 겸손하게 인도하시는 대로 따라야 한다는 것이다.
건강도 그렇다. 우리에게 주어진 시간 동안 기쁘게, 기도하면서 the paths of God를 모두 함께 걸어가야 하리라.
Friday, May 6, 2011
Outside Forces: Significant Challenge Since the 1997 Financial Crisis
One of the significant challenges Korea has had to deal with since the 1997 financial crisis is outside forces.
IMF has introduced an austerity program, mainly financial liberalization: for example, opening Korea’s equity market and banking to foreigners and allowing real estate ownership.
It is debatable whether IMF-induced austerity program has brought about a genuine reform Korea needed and whose interest the IMF has served most.
Korea had been in austerity mode even before the 1997 financial crisis. Much research on Korea’s development path doesn’t pay attention to this.
For better or worse, globalization has intensified since the 1997 financial crisis. Increase in FDI was notable.(Unlike other developing countries, Korea didn’t rely on FDI as a main source of finance in the early days of industrialization) It is important to point out that FDI was perceived as more attractive in service sector than in manufacturing sector. Meanwhile, the major Korean high-tech firms have shifted its manufacturing operation overseas.
Global forces have been blowing bubbles worldwide. Bubbles in Korea are just part of their bigger game.
One has to recognize these outside forces in understanding the overall picture of the Korean economy as well as its political environment.
And yet, as noted many times, outside forces are no excuse for policy failure. Policies could have been formulated in such a way that it fosters organic growth and protects its citizens.
IMF has introduced an austerity program, mainly financial liberalization: for example, opening Korea’s equity market and banking to foreigners and allowing real estate ownership.
It is debatable whether IMF-induced austerity program has brought about a genuine reform Korea needed and whose interest the IMF has served most.
Korea had been in austerity mode even before the 1997 financial crisis. Much research on Korea’s development path doesn’t pay attention to this.
For better or worse, globalization has intensified since the 1997 financial crisis. Increase in FDI was notable.(Unlike other developing countries, Korea didn’t rely on FDI as a main source of finance in the early days of industrialization) It is important to point out that FDI was perceived as more attractive in service sector than in manufacturing sector. Meanwhile, the major Korean high-tech firms have shifted its manufacturing operation overseas.
Global forces have been blowing bubbles worldwide. Bubbles in Korea are just part of their bigger game.
One has to recognize these outside forces in understanding the overall picture of the Korean economy as well as its political environment.
And yet, as noted many times, outside forces are no excuse for policy failure. Policies could have been formulated in such a way that it fosters organic growth and protects its citizens.
Bill Gross: PIMCO Would Only Buy Treasuries If Potential for Another Recession
It seems that another round of QE will get underway, which means more inflationary pressure.
From Reuters:
PIMCO's Bill Gross, who runs the world's largest bond fund, said on Friday the only way he would reverse his "short" position on U.S. government-related bonds and purchase Treasuries again is if the United States heads into another recession.
Since the news on April 11 that Gross turned more bearish on government debt including Treasuries, reflecting his growing worries over the country's fiscal deficit and debt burden, Treasury prices have been soaring.
On Friday Treasury prices fell after an unexpectedly strong U.S. monthly employment report. Treasuries then reversed course on a media report, later denied, that Greece is mulling quitting the euro zone, which revived safe-haven demand for bonds.
Asked Friday what would change his bet against government debt, Gross told Reuters: "Treasury yields are currently yielding substantially less than historical averages when compared with inflation. Perhaps the only justification for a further rally would be weak economic growth or a future recession that substantially lowered inflation and inflationary expectations."
http://www.reuters.com/article/2011/05/06/us-investing-treasuries-pimco-idUSTRE7454RP20110506
From Reuters:
PIMCO's Bill Gross, who runs the world's largest bond fund, said on Friday the only way he would reverse his "short" position on U.S. government-related bonds and purchase Treasuries again is if the United States heads into another recession.
Since the news on April 11 that Gross turned more bearish on government debt including Treasuries, reflecting his growing worries over the country's fiscal deficit and debt burden, Treasury prices have been soaring.
On Friday Treasury prices fell after an unexpectedly strong U.S. monthly employment report. Treasuries then reversed course on a media report, later denied, that Greece is mulling quitting the euro zone, which revived safe-haven demand for bonds.
Asked Friday what would change his bet against government debt, Gross told Reuters: "Treasury yields are currently yielding substantially less than historical averages when compared with inflation. Perhaps the only justification for a further rally would be weak economic growth or a future recession that substantially lowered inflation and inflationary expectations."
http://www.reuters.com/article/2011/05/06/us-investing-treasuries-pimco-idUSTRE7454RP20110506
Thursday, May 5, 2011
Atlantic Capital Management Report: Radical Monetary Policies and the Radical Adjustments That Must Follow
We seem to be experiencing inflation and deflation at the same time, which is called biflation.
From the report:
The Federal Reserve System operates monetary policy as if economic activity during the asset bubbles was representative of true economic potential. To the Fed, the Great Recession has pushed economic activity so far below that potential it can stimulate with zero interest rates and quantitative easing well into the future, even after two years of it already. We believe the Fed is mistaken for the reasons contained in this report. Chief among them is that The Great Recession actually brought the economy back down toward its true potential. Further than that, it is likely that the current weak recovery is still running above true potential, and that is leading to a wide array of problems. Inflation pressures are the biggest.
http://www.scribd.com/doc/54663217/April-2011-Special-Report
From the report:
The Federal Reserve System operates monetary policy as if economic activity during the asset bubbles was representative of true economic potential. To the Fed, the Great Recession has pushed economic activity so far below that potential it can stimulate with zero interest rates and quantitative easing well into the future, even after two years of it already. We believe the Fed is mistaken for the reasons contained in this report. Chief among them is that The Great Recession actually brought the economy back down toward its true potential. Further than that, it is likely that the current weak recovery is still running above true potential, and that is leading to a wide array of problems. Inflation pressures are the biggest.
http://www.scribd.com/doc/54663217/April-2011-Special-Report
Wednesday, May 4, 2011
U.S. Treasury Asks For $2 Trillion Increase in Debt Capacity; U.S. To Reach the Debt Limit on May 16
One may have to see the pattern here.
“Believe me, the next step is a currency crisis because there will be a rejection of the dollar, the rejection of the dollar is a big, big event, and then your personal liberties are going to be severely threatened.”
U.S. Congressman Ron Paul who used to be a medical doctor
From Reuters:
The Treasury has told lawmakers a roughly $2 trillion rise in the legal limit on federal debt would be needed to ensure the government can keep borrowing through the 2012 presidential election, sources with knowledge of the discussions said.
Obama administration officials have repeatedly said that it is up to Congress to decide by how much the $14.3 trillion debt limit should be raised.
But when lawmakers asked how much of an increase would be needed to meet the government's obligations into early 2013, Treasury officials floated the $2 trillion working figure, Senate and administration sources told Reuters.
http://www.reuters.com/article/2011/05/04/us-usa-budget-limit-idUSTRE7434UG20110504
Again from Reuters:
The following are highlights from the U.S. Treasury Department's announcement on Wednesday of its quarterly debt refunding, which will raise $72 billion in new cash.
The Treasury said it would auction $32 billion in three-year notes, $24 billion in 10-year notes and $16 billion in 30-year bonds next week.
When the note and bond sales are settled on May 16, they will exhaust the government's remaining borrowing capacity under the $14.3 trillion statutory debt limit. This will require the government to employ emergency measures to continue borrowing, but these will only be sufficient until Aug. 2, according to Treasury projections. The measures include dipping into two federal employee pension funds.
Treasury officials reiterated their view that they believe Congress will raise the debt limit in time. A Treasury official said that reduced auction sizes or frequencies were options that could be considered to refund maturing debt in case the debt limit increase was delayed.
http://www.reuters.com/article/2011/05/04/usa-budget-debt-idUSN0418427220110504
“Believe me, the next step is a currency crisis because there will be a rejection of the dollar, the rejection of the dollar is a big, big event, and then your personal liberties are going to be severely threatened.”
U.S. Congressman Ron Paul who used to be a medical doctor
From Reuters:
The Treasury has told lawmakers a roughly $2 trillion rise in the legal limit on federal debt would be needed to ensure the government can keep borrowing through the 2012 presidential election, sources with knowledge of the discussions said.
Obama administration officials have repeatedly said that it is up to Congress to decide by how much the $14.3 trillion debt limit should be raised.
But when lawmakers asked how much of an increase would be needed to meet the government's obligations into early 2013, Treasury officials floated the $2 trillion working figure, Senate and administration sources told Reuters.
http://www.reuters.com/article/2011/05/04/us-usa-budget-limit-idUSTRE7434UG20110504
Again from Reuters:
The following are highlights from the U.S. Treasury Department's announcement on Wednesday of its quarterly debt refunding, which will raise $72 billion in new cash.
The Treasury said it would auction $32 billion in three-year notes, $24 billion in 10-year notes and $16 billion in 30-year bonds next week.
When the note and bond sales are settled on May 16, they will exhaust the government's remaining borrowing capacity under the $14.3 trillion statutory debt limit. This will require the government to employ emergency measures to continue borrowing, but these will only be sufficient until Aug. 2, according to Treasury projections. The measures include dipping into two federal employee pension funds.
Treasury officials reiterated their view that they believe Congress will raise the debt limit in time. A Treasury official said that reduced auction sizes or frequencies were options that could be considered to refund maturing debt in case the debt limit increase was delayed.
http://www.reuters.com/article/2011/05/04/usa-budget-debt-idUSN0418427220110504
Tuesday, May 3, 2011
Marshall Auerback: Global Growth Slowdown
From New Deal 2.0:
Governments across the globe are headed for a disaster entirely of their own making.
Though capital markets remain strong, the global economic backdrop continues to deteriorate as fiscal retrenchment takes hold. Commodity markets have rallied in tandem with the fall in the dollar even though there are signs that growth in the emerging world is slowing. Japan’s economy is in the soup, the U.S. economy has failed to pick up as many thought (with a mere 2% growth rate expected to be released for Q1 shortly), and the European economy is overdue for its own slowdown. The U.S. stock market has also rallied despite the threat of a very high gasoline price, disappointing economic growth data, and a fairly mixed earnings picture.
The new theme in the market seems to be that the Fed, unlike other central banks, will stick with super easy money policies, hence the tendency to push the weak dollar, rising equity prices, and soaring commodity prices. But the news that real GDP growth has fallen sharply in the first three months of 2011 is evidence that the current policy mix, with its emphasis on public spending cuts, is not working. If gasoline prices spike as high as they did in June 2008, they will further weaken an already feeble economy. Consumers did not show up at Walmart at the end of the month because they ran out of money. House prices are still falling.
The evidence of an increasingly imploding euro zone (which continues to embrace fiscal austerity with the zeal of a religious fanatic) does not seem to have shifted the debate much in this country. Many European governments are facing a fiscal crisis due to their failure to advance public purpose and raise the funds needed to maintain existing programs. Only the interventions of the ECB are saving the whole system from total meltdown, but the underlying solvency problem for the individual member states is getting worse as the days go by. The Euro bosses are failing, and with any luck, so is political resistance to rational economic policy.
In Asia, things are not much better. Japan’s industrial production is down far, far more than anyone imagined, as is household consumption. Destructive IMF-style thinking still predominates in Tokyo, where the government is in thrall to a gaggle of deficit terrorists who think they can’t afford to fund a proper reconstruction in the country.
The economic data coming out of China is so bad it is hard to assess what is happening, but there is enough evidence to suggest that the Chinese economy too slowed in the fourth quarter of last year and has slowed further in the first quarter of this year.
http://www.newdeal20.org/2011/05/03/get-ready-for-a-global-growth-slowdown-43616/
Governments across the globe are headed for a disaster entirely of their own making.
Though capital markets remain strong, the global economic backdrop continues to deteriorate as fiscal retrenchment takes hold. Commodity markets have rallied in tandem with the fall in the dollar even though there are signs that growth in the emerging world is slowing. Japan’s economy is in the soup, the U.S. economy has failed to pick up as many thought (with a mere 2% growth rate expected to be released for Q1 shortly), and the European economy is overdue for its own slowdown. The U.S. stock market has also rallied despite the threat of a very high gasoline price, disappointing economic growth data, and a fairly mixed earnings picture.
The new theme in the market seems to be that the Fed, unlike other central banks, will stick with super easy money policies, hence the tendency to push the weak dollar, rising equity prices, and soaring commodity prices. But the news that real GDP growth has fallen sharply in the first three months of 2011 is evidence that the current policy mix, with its emphasis on public spending cuts, is not working. If gasoline prices spike as high as they did in June 2008, they will further weaken an already feeble economy. Consumers did not show up at Walmart at the end of the month because they ran out of money. House prices are still falling.
The evidence of an increasingly imploding euro zone (which continues to embrace fiscal austerity with the zeal of a religious fanatic) does not seem to have shifted the debate much in this country. Many European governments are facing a fiscal crisis due to their failure to advance public purpose and raise the funds needed to maintain existing programs. Only the interventions of the ECB are saving the whole system from total meltdown, but the underlying solvency problem for the individual member states is getting worse as the days go by. The Euro bosses are failing, and with any luck, so is political resistance to rational economic policy.
In Asia, things are not much better. Japan’s industrial production is down far, far more than anyone imagined, as is household consumption. Destructive IMF-style thinking still predominates in Tokyo, where the government is in thrall to a gaggle of deficit terrorists who think they can’t afford to fund a proper reconstruction in the country.
The economic data coming out of China is so bad it is hard to assess what is happening, but there is enough evidence to suggest that the Chinese economy too slowed in the fourth quarter of last year and has slowed further in the first quarter of this year.
http://www.newdeal20.org/2011/05/03/get-ready-for-a-global-growth-slowdown-43616/
Monday, May 2, 2011
Japan’s QE Continues: Public Debt of One Quadrillion Yen by March, 2012
From Zero Hedge:
Part 2 of our "Japan resumes hyprintspeed speed" series comes courtesy of The Privateer's Bill Buckler who has discovered that quadrillion is the new black.
The latest projections from the Japanese Finance Ministry regarding the fiscal year which started on April 1 make for sobering reading. They say that Japan’s “public” (funded) debt will probably rise by 5.8 percent this year - to 997.7 TRILLION Yen ($US 12.2 TRILLION at current exchange rates). Should these projections be even slightly on the optimistic side - and government financial projections always are - then Japan could easily be looking at a public debt of 1,000 TRILLION Yen by March 31, 2012.
There is another way of expressing 1,000 TRILLION. It is the same as ONE QUADRILLION.
The sheer magnitude of these numbers has long been a talking point for the watchers of international finance. Now, they are becoming very nervous indeed. The OECD has recently “urged” the Japanese government to “do something” about their deficits, especially in the wake of the earthquake disaster. Noting that Japanese sovereign debt is about to hit 204 percent of GDP, they suggested that Japan’s current sales tax be “at least” doubled from its present 5 percent to 10 percent. The Japanese Foreign Ministry politely declined to comment on this suggestion, contenting themselves with assuring the OECD that - “We will continue to work to maintain and secure trust in Japanese government bonds.”
http://www.zerohedge.com/article/japan-resumes-hyprintspeed-part-2-here-comes-one-quadrillion
Part 2 of our "Japan resumes hyprintspeed speed" series comes courtesy of The Privateer's Bill Buckler who has discovered that quadrillion is the new black.
The latest projections from the Japanese Finance Ministry regarding the fiscal year which started on April 1 make for sobering reading. They say that Japan’s “public” (funded) debt will probably rise by 5.8 percent this year - to 997.7 TRILLION Yen ($US 12.2 TRILLION at current exchange rates). Should these projections be even slightly on the optimistic side - and government financial projections always are - then Japan could easily be looking at a public debt of 1,000 TRILLION Yen by March 31, 2012.
There is another way of expressing 1,000 TRILLION. It is the same as ONE QUADRILLION.
The sheer magnitude of these numbers has long been a talking point for the watchers of international finance. Now, they are becoming very nervous indeed. The OECD has recently “urged” the Japanese government to “do something” about their deficits, especially in the wake of the earthquake disaster. Noting that Japanese sovereign debt is about to hit 204 percent of GDP, they suggested that Japan’s current sales tax be “at least” doubled from its present 5 percent to 10 percent. The Japanese Foreign Ministry politely declined to comment on this suggestion, contenting themselves with assuring the OECD that - “We will continue to work to maintain and secure trust in Japanese government bonds.”
http://www.zerohedge.com/article/japan-resumes-hyprintspeed-part-2-here-comes-one-quadrillion
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