Microsoft Has Failed

From SemiAccurate:

Microsoft has three product lines that underpin everything, Windows, Windows Server, and Windows Mobile. On those, the other moneymakers, Office and Exchange, run exclusively. The apps use protocols that are locked down with dubious methods, and will not run on any competition. The competition is likewise excluded from doing what Microsoft can, either directly like Novell, or by raising the cost to the point of it not being profitable. This is how the wagons are circled, with every iteration, the cost of competing go up, and value of alternatives go up too.

The problem is that if you are locked in with a choice of 100% Microsoft or 0% Microsoft, once someone goes, it isn't a baby step, they are gone. Once you start using Google Docs and the related suites, you have no need for Office. That means you, or likely your company, saves several hundred dollars a head. No need for Office means no need for Exchange. No need for Exchange means no need for Windows Server. No need for Office means no need for Windows. Once the snowball starts rolling, it picks up speed a frightening pace. And that is where we are. The barriers to exit are now even more potent barriers to entry.

Microsoft bought Nokia to both kill off one competitor and to buy their market share. Microsoft at the time had approximately 12% smartphone OS marketshare, Nokia a bit over 30%. With the collaboration, Nokia and Microsoft, together with all the other OS partners selling Windows Phone 7.x, sales are now hovering around 2% of smartphone market share.

Microsoft's mobile aspirations have failed so spectacularly that it is almost impossible to account for. Rather than fix the lock in that excludes the overwhelming majority of the market that does not have a Windows phone, Microsoft doubled down with the new iteration playing the same compatibility games they did before to lock out developers, competitors, and innovators.

The death spiral for Microsoft is in full effect, and management is expending a lot of effort to speed it up. Microsoft is unwilling to change, and that is very clear. Even if they wanted to, they are culturally far beyond the point of being able to. What was a slow bleed of marketshare is now gushing, and management is clueless, intransigent, and myopic. Game over, the thrashing will continue for a bit, but it won't change the outcome. Microsoft has failed.

http://semiaccurate.com/2012/11/14/microsoft-has-failed/

Mike Krieger: The Madness Of A Lost Society

From Zero Hedge:

While we are very far gone at the moment as a society, never forget there are millions of people out there fighting for what is right and we will succeed in ushering in a new and more positive era for life on earth.  These 11 minutes are well worth your time.

http://www.zerohedge.com/news/2012-11-28/guest-post-madness-lost-society

Mark McHugh: The Cost Of Kidding Yourself

From Zero Hedge:

Five years ago, every American would have considered a trillion-dollar budget deficit a national tragedy.  If you believe the CNBC parrot show, NOT having a trillion-dollar deficit is now a sure sign of the Apocalypse.  I speak of course of the cleverly dubbed “Fiscal Cliff,” which panicked CNBC apologists are required to mention no less than 5,000 times a day.

Creating the illusion of economic growth is easy if you can print money.  It’s a prank you can play on an entire country.  Cut the value of the currency in half and the economy’s size will appear to double.  If it doesn’t, you’re in recession (whether you know it or not).   Cavemen probably understood this concept better than America’s best economic minds.

The only way to accurately measure changes in a nation’s economy is to do so relative to the world (see Notes for non-nerds below before protesting).  According to the World Bank, the U.S. represented 31.8% of the world’s economic activity in 2001.  By the end of 2011, that share had dropped to 21.6%, meaning America’s slice of the world economy is 32% smaller than it was a decade ago, and getting smaller every day.  Note that America’s housing bubble did nothing to boost the U.S. on the global stage.

As horrific as these results are, they’re better than Japan’s, whose “lost decade” proved only to be prologue for its “lost-er decade.”  Japan’s share of the world economy fell more than 35% from 2001 to 2011 (literally worse than Zimbabwe) and has now shriveled 54% from its peak.  But Japan’s real collapse did not coincide with the bursting of its stock and real estate bubbles in 1990 and 1991 respectively.  The decline actually began in 1995 when policymakers allowed government debt to exceed 90% of GDP (a milestone the U.S. quietly passed in 2010). 

The more they “fixed” it, the more it broke.  17 years later, the only thing Japan has proved is that smart Japanese economists are about as real as Godzilla.  Time and time again, the country has chosen collapse over admitting failure. On November 19, 2012, Bloomberg reported, “The Japanese government will spend 1 trillion yen ($12.3B) on a second round of fiscal stimulus as it tries to revive an economy at risk of sliding into recession.”  It would be funny if it wasn’t so tragic.

http://www.zerohedge.com/news/2012-11-28/cost-kidding-yourself

Bank of Japan Posts Whopping ¥233 Billion Loss As Its Soaring Balance Sheet Hits Record ¥156 Trillion

From Zero Hedge:

But, but, a central bank can never lose money. Bzzzz, wrong. As it just so happens, the world's most tragicomic farce of a central bank, and one which is about to officially lost its (faux) "independence" and become a branch of the Japanese government if the up and coming PM Abe has his way, the Bank of Japan, just reported that in the quarter ended September 30, the Japanese central bank reported an operating loss of ¥183.4 billion, and a net loss of ¥232.9 billion. As a comparison, the loss in the same period in 2011 was "only" 91 billion. This is a harbinger of the total collapse that is the utterly meaningless capital tranche of all central banks will go through before the terminal phase of the global Keynesian experiment is finally completed.  But in the meantime, enjoy this chart of the Bank of Japan's balance sheet returning back to a record ¥156... trillion.

http://www.zerohedge.com/news/2012-11-28/bank-japan-posts-whopping-%C2%A5233-billion-loss-its-soaring-balance-sheet-hits-record-%C2%A51

Chart Of The Day: Continued Collapse In Capital Goods New Orders Confirms US Is In Recession

From Zero Hedge:

While the just released Durable Goods orders report for October came in modestly better than expected (which many thought would be a decline due to Hurricane Sandy), the primary driver of this continues to be record durable good inventory accumulation. Excluding the noise, and focusing only on real, non-noisy economic strength metrics such as New Capital Goods Orders (technically defined as the year over year change in Non-Defense Capital Goods Excluding Aircraft), a very different and far uglier picture emerges. In fact, the October Y/Y Plunge of -8.1% in this major indicator was the biggest drop since 2009.


To summarize: according to one of the least susceptible to manipulation indicators of US economic strength and growth, the US economy is now in a recession.

Source: St. Louis Fed

http://www.zerohedge.com/news/2012-11-27/chart-day-continued-collapse-capital-goods-new-orders-confirms-us-recession

The Scariest Chart Of The Quarter: Student Debt Bubble Officially Pops As 90+ Day Delinquency Rate Goes Parabolic

From Zero Hedge:

We have already discussed the student loan bubble, and its popping previously, most extensively in this article. Today, we get the Q3 consumer credit breakdown update courtesy of the NY Fed's quarterly credit breakdown. And it is quite ghastly. As of September 30, Federal (not total, just Federal) rose to a gargantuan $956 billion, an increase of $42 billion in the quarter - the biggest quarterly update since 2006. But this is no surprise to anyone who read our latest piece on the topic. What also shouldn't be a surprise, at least to our readers who read about it here first, but what will stun the general public are the two charts below, the first of which shows the amount of 90+ day student loan delinquencies, and the second shows the amount of newly delinquent 30+ day student loan balances. The charts speak for themselves.


http://www.zerohedge.com/news/2012-11-27/scariest-chart-quarter-student-debt-bubble-officially-pops-90-day-delinquency-rate-g

America's Lost Decade In One Simple Chart

From Zero Hedge:

Forget the stock market's dismal decade of much-ado-about-nothing and ignore the USD Dollar's declination; when it comes to reflection on what this once great nation has 'created' since 2001, the following chart from Pennsylvania's Department of Public Welfare sums it up better than most.



http://www.zerohedge.com/news/2012-11-27/americas-lost-decade-one-simple-chart

Goldman's Global Domination Is Now Complete As Its Mark Carney Takes Over Bank Of England

From Zero Hedge:

Back on July 3, we made an explicit and very simple prediction: "now that the natural succession path at the BOE has been terminally derailed, it brings up those two other gentlemen already brought up previously as potential future heads of the BOE, both of whom just happened to work, or still do, at... Goldman Sachs:  Canada's Mark Carney or Goldman's Jim O'Neil. Granted both have denied press speculation they will replace Mervyn King, but it's not like it would be the first time a banker lied to anyone now, would it (and makes one wonder if this whole affair was not merely orchestrated by the Squid from the get go... but no, that would be a 'conspiracy theory'.)"

A few weeks later, in "On The Path To Global Goldmanation: Former Goldmanite Mark Carney To Head The BOE After All?" we added:

Granted both have denied press speculation they will replace Mervyn King, but it's not like it would be the first time a banker lied to anyone now, would it (and makes one wonder if this whole affair was not merely orchestrated by the Squid from the get go... but no, that would be a 'conspiracy theory'.)" We wonder if this speculation can be upgraded from conspiracy theory to conspiracy fact, now that Bloomberg itself has written a major article discussing just this suddenly very likely outcome.

From Bloomberg:

Carney Leading Bank of England Seen as Scandal Remedy
  
London is losing so much trust as the global financial center that Prime Minister David Cameron may need to consider an unprecedented choice for Bank of England governor: Mark Carney, the Canadian who polices the world’s financial system and has no ties to the bailouts or rigged markets tainting Labour and Conservative governments alike.

The 47-year-old Carney, who received his masters and PhD degrees from Oxford University, is no stranger to the City of London after working there with Goldman Sachs Group Inc. Now serving as governor of the Bank of Canada and the head of the Financial Stability Board, he is unscathed by the fallout from the 2008 financial crisis.

“Mark Carney is one of the brightest, most capable people I’ve ever met in global finance and central banking,” said Tim Adams, a former U.S. Treasury undersecretary who worked with Carney at Group of Seven meetings. “I’ve been around these circles a long time and he’s smart, politically savvy, a good manager and has an outstanding track record. It’s tough to find all those elements in a single person.”

Domestic candidates for the job include Gus O’Donnell, former head of the U.K. civil service, Financial Services Authority Chairman Adair Turner and Bank of England Deputy Governor Paul Tucker, a three-decade veteran at the bank.

There is one problem regarding the domestic candidates: none of them have Goldman on their resume, something which sets not only Mark Carney, but also Bill Dudley and Mario Draghi apart.

As for the punchline:

“Why not get a head that’s global? Bankers aren’t very popular, and a Canadian sounds like a good choice,” said Kent Matthews, a professor at Cardiff University and former Bank of England researcher. “It may well be that to restore credibility they have to look outside.”

So that's the strategy: play Carney off as a Canadian, instead of as Goldman. We wonder how many minutes the general public will be fooled by that particular strawman.

* * *
We are, once again, 100% correct, and have beaten all the bookie odds which had Tucker as a favorite and Mark Carney as a long odds outsider. Pity: all one needs to realize and remember how the events in the world play out is to remember one simple thing: GOLDMAN SACHS RUNS IT. Everything else is secondary.
As we expected months ago, it has just been confirmed.

• MARK CARNEY NAMED AS NEXT BANK OF ENGLAND GOVERNOR
• OSBORNE: CARNEY WILL BRING FRESH PERSPECTIVE
• OSBORNE: CARNEY WON'T COMMENT ON U.K. POLICY BEFORE TAKING POST
• BANK OF CANADA GOVERNOR CARNEY SAYS HONORED TO ACCEPT BOE ROLE
• OSBORNE SAYS U.K. NEEDS `THE VERY BEST' AT THIS TIME
• OSBORNE SAYS CARNEY IS BEST, MOST EXPERIENCED CANDIDATE

Finally, our conclusion from that article, which today merely encapsulated:

• Because with money printing squids like these, who needs sovereign states?

http://www.zerohedge.com/news/2012-11-26/goldmans-global-domination-now-complete-its-mark-carney-takes-over-bank-england

PRoPA-GaNGNaM STYLe EXPLaiNeD...; Gangnam Style, Dissected: The Subversive Message Within South Korea's Music Video Sensation (싸이 강남스타일 메시지)

From Zero Hedge:

Gangnam Style is now the most watched youtube, and PSY is one cool dude. This video is actually subversive as well as viral. Gangnam is the most affluent district in Korea. Looking for all that Samsung money? Look in Gangnam. He is mocking South Korean consumerism and the superficial lifestyle of the Korean upperclass. He produced this video outside of the mainstream K-Pop industrial complex and accomplished what they have always coveted on a shoe string, a worldwide hit.

There is much to be learned from Mr PSY's style of Visual Combat. It is cross-cultural, it is funny, catchy and has a message. Let's emphasize the message. Could we expect as much from Justin Boober?

For more read this: Article

http://www.zerohedge.com/contributed/2012-11-25/propa-gangnam-style-explained?page=1

From the Atlantic:

Beneath the catchy dance beat and hilarious scenes of Seoul's poshest neighborhood, there might be a subtle message about wealth, class, and value in South Korean society.

I certainly didn't, beyond the basics: Gangnam is a tony Seoul neighborhood, and Park's "Gangnam Style" video lampoons its self-importance and ostentatious wealth, with Psy playing a clownish caricature of a Gangnam man. That alone makes it practically operatic compared to most K-Pop. But I spoke with two regular observers of Korean culture to find out what I was missing, and it turns out that the video is rich with subtle references that, along with the song itself, suggest a subtext with a surprisingly subversive message about class and wealth in contemporary South Korean society. That message would be awfully mild by American standards -- this is no "Born in the U.S.A." -- but South Korea is a very different place, and it's a big deal that even this gentle social satire is breaking records on Korean pop charts long dominated by cotton candy.

One of the first things Hong pointed to in explaining the video's subtext was, believe it or not, South Korea's sky-high credit card debt rate. In 2010, the average household carried credit card debt worth a staggering 155 percent of their disposable income (for comparison, the U.S. average just before the sub-prime crisis was 138 percent). There are nearly five credit cards for every adult. South Koreans have been living on credit since the mid-1990s, first because their country's amazing growth made borrowing seem safe, and then in the late 1990s when the government encouraged private spending to climb out of the Asian financial crisis. The emphasis on heavy spending, coupled with the country's truly astounding, two-generation growth from agrarian poverty to economic powerhouse, have engendered the country with an emphasis on hard work and on aspirationalism, as well as the materialism that can sometimes follow. 

Gangnam, Hong said, is a symbol of that aspect of South Korean culture. The neighborhood is the home of some of South Korea's biggest brands, as well as $84 billion of its wealth, as of 2010. That's seven percent of the entire country's GDP in an area of just 15 square miles. A place of the most conspicuous consumption, you might call it the embodiment of South Korea's one percent. "The neighborhood in Gangnam is not just a nice town or nice neighborhood. The kids that he's talking about are not Silicon Valley self-made millionaires. They're overwhelmingly trust-fund babies and princelings," he explained. 

The video is "a satire about Gangnam itself but also it's about how people outside Gangnam pursue their dream to be one of those Gangnam residents without even realizing what it really means," Kim explained to me when I got in touch with her. Koreans "really wanted to be one of them," but she says that feeling is changing, and "Gangnam Style" captures people's ambivalence.

"Koreans have been kind of caught up in this spending to look wealthy, and Gangnam has really been the leading edge of that," Hong said. "I think a lot of what [Psy] is pointing out is how silly that is. The whole video is about him thinking he's a hotshot but then realizing he's just, you know, at a children's playground, or thinking he's playing polo or something and realizes he's on a merry-go-round."

"I think it all ties back to the same thing: the pursuit of materialism, the pursuit of form over function," Hong said. "Koreans made extraordinary gains as a country, in terms of GDP and everything else, but that growth has not been equitable. I think the young people are finally realizing that. There's a genuine backlash. ... You're seeing a huge amount of resentment from youth about their economic circumstances." Even if Psy wasn't specifically nodding to this when he wrote the song and shot the video, it's part of the contemporary South Korean society that he inhabits. "The context is all of these tensions going on where Koreans are realizing where they're at, how they got there, what they need to do to move forward."

http://www.theatlantic.com/international/archive/2012/08/gangnam-style-dissected-the-subversive-message-within-south-koreas-music-video-sensation/261462/

"There will be a time of distress such as has not happened from the beginning of the nations. At that time everyone whose name is found written in the book will be delivered. Multitudes who sleep in the dust of the earth will awake, some to everlasting life, others to disgrace and endless shame. Those who are wise will shine like the brightness of the heavens, and those who lead the many to righteousness, like the stars, forever."
Daniel 12:1-3

Independent Candidate Ahn Withdraws From Presidential Race; "안철수 사퇴했어도, 대선 정국 안철수에 달렸다"

From Yonhap:

 Independent presidential candidate Ahn Cheol-soo on Friday announced his abrupt withdrawal from the presidential campaign, endorsing Rep. Moon Jae-in of the main opposition Democratic United Party (DUP) and clearing the way for a two-way race with ruling party hopeful Park Geun-hye in the Dec. 19 polls.

   "I am giving up my presidential candidacy," Ahn said in a hurriedly arranged news conference in Seoul. "From now on, Moon Jae-in is the single liberal candidate."

   The abrupt announcement came shortly after the two candidates failed to narrow differences on how to set the rules for merging candidacies. Ahn and Moon had been under intense negotiations to unify their campaigns to defeat Park.

   "My last proposal for arbitration failed to lead to an agreement. Locking horns over the method of merging candidacies is not righteous for the people anymore," a teary-eyed Ahn said, but added that he will "serve in a war as a commoner" to create "new politics."

   "Although my dream for new politics will be delayed for a while, Ahn Cheol-soo is really longing for a new era and new politics," Ahn said.

http://english.yonhapnews.co.kr/national/2012/11/23/91/0301000000AEN20121123010700315F.HTML

프레시안으로부터:

무소속 안철수 후보의 사퇴가 정국에 미칠 영향에 대해 전문가들은 조심스런 전망을 내놓았다. 결국 야권 후보 단일화가 이뤄지긴 했지만, 야권 지지층이 기대했던 '시너지 효과'가 나타날지에 대해선 자신하기 어렵다는 관측이 많았다.

이 평론가는 이후 국면에서 민주당의 과제에 대해 "그 동안 단일화 프레임에 갇혀 있던 혁신문제, 친노 패권주의가 드러날 것이고 문 후보가 대선후보로서 어떻게 리더십을 발휘하느냐가 중요할 것"이라며 "차기 정부에 있어서 '친노'를 청와대 비서관 등으로 임용하지 않겠다는지 이런 기득권 포기, 참여정부와 결별하는 인적쇄신 정도는 나와 줘야 (유권자가) 설득될 것"이라고 말했다.

박상헌 공간과미디어연구소장의 평은 더 신랄했다. 박 소장은 안 후보 사퇴의 의미에 대해 "첫째로 단일화 실패이고, 다음으로는 새정치의 실패"라며 "단일화를 통해 박근혜 후보를 극복하려는 (야권의) 의도에 큰 타격을 받게 됐다"고 평가했다.

박 소장은 민주당에 대해 "엄청난 악재에 봉착한 것이다. '1+1'이 시너지를 내도 박 후보를 이길까 말까인데 안 후보는 '드롭'했고 안 후보의 지지자는 흩어질 것"이라며 "문 후보에게는 충격적이고 당혹스런 국면일 것"이라고 했다. 그는 "안 후보 지지층을 최대한 끌어안는 게 화급한 숙제인데, 간단하진 않을 것 같다"고 야권에 비관적 전망을 내놨다.

익명을 요구한 한 야권 성향의 정치평론가도 <프레시안>과의 통화 첫마디에서 "망했다"고 탄식했다. 그는 "당분간은 어렵다. 안철수를 존중하고, 애지중지하라고 했지 않나. 불면 날아갈까 쥐면 꺼질까 하라고 했는데 그렇게 압박해 내몰면 되나"라며 "안철수 때문에 민주당이 살아난 건데, 물에 빠진 사람 건져 주니 보따리 내놓으란 식"이라고 안 후보와의 단일화 국면에서 민주당이 보인 자세를 비판했다. 그는 "안 후보 지지층이 얼마나 실망하고 화가 났겠나"라며 "그 사람들을 끌어안지 못하면 진다"고 덧붙였다.

한 위원은 이어 '문재인 변수'에 대해 "후보단일화 프레임에 가려져 있던 민주당 혁신을 얼마나 제대로 하느냐, 여기에 따라 안 후보를 지지했던 20~30대들과 '민주당 때문에 문재인 이 못 미덥다'던 사람들이 투표장에 와 문 후보를 지지할 수 있을 것"이라고 했다.

http://www.pressian.com/article/article.asp?article_num=40121123231906&section=01&t1=n

UBS George Magnus: China: The End Of Extrapolation

From Zero Hedge:

As UBS George Magnus says, "Many people think the downswing has now ended, pointing to slightly feistier data in September and October for industrial production, fixed asset investment, retail sales, and exports, continued high levels of total social financing, and a renewed rise in corporate leverage." The trivial rebound will soon end but a far bigger problem will then reemerge: "the short-term outlook for growth pales into significance against the view that China will continue to grow at 7-8.5% for the foreseeable future."

And herein lies the rub: because while China is currently experiencing a brief dead cat bounce, a far greater question remains open: can China reverse its declining GDP growth rate and continue growing at what most realists now perceive as an unsustainable pace. Says Magnus in attempting to provide an answer: "This [...] rests on three critical but questionable propositions: political will and capacity, the insensitivity of consumption to the investment outlook, and the nature of rebalancing, itself."

Magnus then proceeds to share his vision of whether China can "rise above" the reality of an economy forced to transition from investment driven to one of consumption: a vision which is the topic of his latest paper titled "China: the end of extrapolation."

In short, his answer (which at 11 single-spaced pages is hardly short) is that the party in China has ended.

http://www.zerohedge.com/news/2012-11-22/whither-china-end-extrapolation

How Korea Has Changed Since 1997 (IMF 위기이후 한국은 어떻게 변했는가)

This article covers quite a few issues I have addressed on this blog: for instance, while Korea's GDP has expanded and chaebols’ balance sheets got strengthened, the middle class has diminished and the household debt load has increased.  We have discussed the underlying causes for this troubling reality.

After the 1997 financial crisis, Korea should have taken their medicine and had it done and over with.  And yet, it hasn’t.  Thanks to the global boom and bubbles, Korea has maintained the trade surplus to keep the ponzi game going.  This time around, things are different.

Again, what kind of country Korea wishes to be? 

As Acemoglu and Robinson argue, “national success or failure is the result largely of policy decision”.

Policy undertaking should be geared toward serving the broader social interest, pursuing the broadest happiness and success for the most people.

When a nation is unbalanced on many fronts, the risks of an eventual breakdown are high.

External forces and a globalist dynamic are no excuses for policy failure.

Korea is desperate for new measures.

From: Joogang Daily:

Today is the 15th anniversary of the day the Korean government went to the International Monetary Fund for help during the financial meltdown. The IMF crisis, as it came to be known in Korea, was a turning point in the country’s history, exposing many of the weaknesses in the foundation of the “Miracle on the Han.” The chaebol borrowed too much and ran their businesses on dangerously miniscule profit margins. Corporate transparency was a joke.

Korea rose from the ashes in only three years, repaying all its debts, and became an international example of surviving an economic and financial crisis. Companies that faced extinction survived through massive layoffs and restructuring to become global competitors with dominant market shares in smartphones, computer chips, shipbuilding and automobiles.

The Fortune 500 includes 13 Korean companies. The nation’s gross domestic product, which was $345.4 billion in 1998, has expanded to $1.12 trillion as of last year. Foreign reserves, which shrank to $20.3 billion in 1997, are now over $300 billion, the seventh-largest in the world. The nation’s debt is 34 percent of its GDP, one-third the OECD average, and its credit ratings were recently upgraded while Europe melts down.

Take a look at Kookmin Bank, the bank that laid off Kim back in 1998. It used the crisis to expand through acquisition and mergers. Last year, its assets were 277 trillion won ($256 billion), five times the level of 1997. Profits were 1.77 trillion won, having grown 17-fold.

So while Korea long ago rebounded from the IMF crisis and, in many ways, has hit the top of its game, the crisis created a lost generation of Koreans that never managed to pull themselves back to the ranks of the aspiring middle class. Fathers who lost solid jobs are still struggling to make a living, and the middle class has shrunk compared to the mid-1990s. And now, some of their children are giving up hope of finding jobs.

Post-crisis Korea, with its turned-around finances and its newly competitive companies, has moved on, leaving that generation behind.


In 1995, Korea’s middle income class accounted for 75 percent of the total population. By 2010, the figure had fallen to 67.5 percent.

During the same period, the lower income class went up from 7.7 percent to 12.5 percent.

“Once they tumble into poverty, there are a lot of families that stay in poverty due to a lack of social welfare networks or programs that would help the laid off find another job,” says Ahn Sang-hoon, a Seoul National University professor specializing in social welfare.

Lee Jang-hyuk, a marketing professor at Korea University, says the unbalanced growth policies that focused all resources on major exporters only got worse after the IMF crisis.

“The gap between those with stable jobs and paychecks and those without only got worse,” Lee says.

While household incomes today haven’t increased much, debts are mounting.

The real monthly wage, which reflects inflation, was 2.22 million won in 1997, which grew to 2.97 million won in 2007, and then slumped to 2.73 million won as of 2010. That is 23 percent higher than in 1997.

But total household debt in Korea grew from 183 trillion won in 1998 to 922 trillion won as of June this year, an 80 percent increase.

The debt-to-disposable-income ratio shot up from 104 percent in 2000 to 158 percent in 2010.

“Instead of spending welfare on people who have fallen into poverty, the government has a policy to expand debt through financial programs targeted at low-income families,” says Seoh Geun-woo, senior advisor at the Korea Institute of Finance.

“It’s like the government is creating credit delinquents in hopes of keeping its fiscal balance unchanged.”

Experts like Kim Yoon-tae, a Korea University sociology professor, say the government should focus on policies that would generate jobs such as incentives to small and midsized companies to hire people, or increase welfare for people who run small businesses like restaurants.

http://koreajoongangdaily.joinsmsn.com/news/article/article.aspx?aid=2962688

Meanwhile, In The Land Of The Setting Sun... And Exports

Again, as pointed out many times, Korea is on a similar trajectory.  We are watching to see what happens in Japan in the next few years because Korea may be in about the same position in the not-too-distant future.

From Zero Hedge:

Things are going from worst to worsterer in Japan. Somewhat ironically (given our recent post), this update to the state of play awaiting Mr. Abe is not good. With the Senkaku debacle flaring still in the background, we wonder just how much 'face' the Japanese are willing to lose as their exports fall 6.5% (for the fifth month in a row) dominated by an 11.6% drop 'to' China (which accounted for around 20% of Japanese exports until recently) making it extremely likely the nation is headed for yet another recession. The trade balance missed large to the downside yet again, extending a multi-year trend (and drastically reducing the 'net' exports capital buffer), and so (as USDJPY remains 'strong' despite REER being well below its 1995 peak) we are to believe yet another JPY1tn Koo-nesian fiscal stimulus will do the trick.

http://www.zerohedge.com/news/2012-11-20/meanwhile-land-setting-sun-and-exports

Kyle Bass On The End Of The Debt Super-Cycle

From Zero Hedge:

"When you let the politicians run monetary policy, well, that is how it [ends]... All of the ingredients are there [for Japan now] for this vicious cocktail to fall apart" is how Kyle Bass concludes this broad and succinct recent interview. With total credit market debt-to-GDP globally around 350% (or ~$200 trillion), his thesis remains that many countries will reach their profligate endpoint soon (if not already in Greece's case - where investors have already lost 90c on the dollar); but that managing around this current evolution is the single-hardest period for investing of the last few decades. The modest Texan notes it is naive to think he can call the end of a 70-year debt-super-cycle with any precision (as in mid-December's Japan fiscal data and Abe's election) but when you look at all of the inputs, he believes that Japan has crossed the proverbial Rubicon in the last two months and describes in this rather breathtaking clip how the end of twenty years of conjecture on what may happen to Japan will come to pass.

http://www.zerohedge.com/news/2012-11-20/kyle-bass-end-debt-super-cycle

Minxin Pei: Now The Hard Part Begins: The China Challenge

From the Diplomat:

Xi Jinping has taken the reigns of the Communist Party. With multiple domestic and international challenges mounting, there is much to be done. The most immediate obstacle to any prospects of major policy shifts lies at the very top.  The new standing committee has a strong conservative presence.  The perception of the new team is that it is dominated by relatively mediocre  and risk-averse leaders. It would be too optimistic or premature to believe that such a delicately balanced body could address China’s problems quickly and decisively. The result of this delicate balancing act is likely a cautious start characterized by the adoption of relatively easy policy measures designed mainly to differentiate the new leadership from its immediate predecessor. The bottom line in evaluating China’s new leadership in general, and Xi in particular:  he and his colleagues will have to walk the walk. His predecessors have done enough talking already.

http://thediplomat.com/2012/11/20/now-the-hard-part-begins-xi-jinpings-challenge/

Charting The Demise Of The US Consumer

From Zero Hedge:

Sentiment surveys are sending the all-clear; the US Consumer (that 72% of all economic activity in the US) is as happy as they were five years ago (pre-crash) and American Idol is due to start again soon. However, recency-biased surveys apart, the reality in the data is far more dismal. The Philly Fed's ADS business conditions index is back at its worst since the crisis and decidedly recessionary (critical since it tracks many of the same indicators as the recession-confirming NBER).


Even more concerning, as Bloomberg Briefs notes, the stagnancy of real disposable income and contraction of revolving credit has led to a disaster-prone drop in industrial production of consumer goods (-0.9% in October) and a significant slide in the all-important retail sales data.


http://www.zerohedge.com/news/2012-11-19/charting-demise-us-consumer

On Surviving The Monetary Meltdown

From Zero Hedge:

After 40 years of boozing on easy money and feasting on fantastical asset price inflations, the global monetary system is approaching catharsis, its arteries clogged and instant cardiac arrest a persistent threat. ‘Muddling through’ is the name of the game today but in the end authorities will have two choices: stop printing money and allow the market to cleanse the system of its dislocations. This would involve defaults (including those of sovereigns) and some pretty nasty asset price corrections. Or, keep printing money and risk complete currency collapse. We think they should go for option one but we fear they will go for option two. In this environment, how can people protect themselves and their property? Our three favourite assets are, in no particular order, gold, gold and gold. After that, there may be silver. We are, in our assessment, in the endgame of this, mankind’s latest and so far most ambitious, experiment with unconstrained fiat money. The present crisis is a paper money crisis. Whenever paper money dies, eternal money – gold and silver – stage a comeback. Remember, paper money is always a political tool, gold is market money and apolitical.

http://www.zerohedge.com/news/2012-11-18/surviving-monetary-meltdown

Intel CEO Otellini Retiring In May

From Zero Hedge:

One by one, everyone is quietly heading for the exits.

From the press release:

Intel Corporation today announced that the company’s president and CEO, Paul Otellini, has decided to retire as an officer and director at the company’s annual stockholders’ meeting in May, starting an orderly leadership transition over the next six months.

http://www.zerohedge.com/news/2012-11-19/intel-ceo-otellini-retiring-may

"Finally, my friends, keep your minds on whatever is true, pure, right, holy, friendly, and proper. Don’t ever stop thinking about what is truly worthwhile and worthy of praise."
Philippians 4:8

Kyle Bass: 150 Seconds Of "You Can't Handle The European Truth"

From Zero Hedge:

"A popular revolt will happen" is how Kyle Bass sums up the endgame from kicking the can in Europe. Dismissing the headline-making 'But, Blackrock is buying European bonds', Bass reminds Bloomberg's Stephanie Ruhle that very few ever get the crises correct and that the herd will keep buying things until it blows apart. With massively over-leveraged banks and a Greek dependency, Bass notes that investing in Europe now is like picking up a dime in front of a bulldozer and expects Germany will eventually leave the Euro (within 3-4 years) as the 'joint-and-several' liabilities will never happen. 150 well-spent seconds to summarize just what is going in Europe, as he concludes with Milton Friedman's quote on Europe: "when they hit a bump in the road, it will tear them apart at the core."

Stay tuned to the end for his clear reasoning for why this will not end well...

http://www.zerohedge.com/news/2012-11-16/150-seconds-you-cant-handle-european-truth-kyle-bass

Chart Of The Day: The World's Scariest Divergence

From Zero Hedge:

We like to keep our charts just simple enough that a PhD in Economics can understand them; and so we present what must be the scariest chart in the world for much of the developing (and for that matter developed) world. Demand for food is rising inexorably (as is the demand for fuel) but at the same time supply is falling rapidly as the availability of arable land per capita plunges. Perhaps this (along with central bank liquidity spillovers) explains the 'paradigm' shift in staple prices. Food for thought? (pun intended)

Rising demand... meet falling supply...



and the impact...



Charts: Goldman Sachs

http://www.zerohedge.com/news/2012-11-16/chart-day-worlds-scariest-divergence

Ron Paul's Farewell Speech To Congress

From Zero Hedge:

Representative Ron Paul gets his opportunity to say farewell - providing a compendium of reality and liberty for all that choose to listen.. He begins: "My goals in 1976 were the same as they are today: to promote peace and prosperity by a strict adherence to the principles of individual liberty" and goes on..."economic ignorance is common place, as the failed policies of Keynesianism are continually promoted"... "psychopathic totalitarians endorse government initiatives to change our world"

http://www.zerohedge.com/news/2012-11-14/ron-pauls-farewell-congress-live-webcast

From Zero Hedge:

Presented with little comment since whatever we say would likely be superfluous to this all-encompassing speech. The full Ron Paul 'Farewell to Congress' speech and transcript:

...To achieve liberty and peace, two powerful human emotions have to be overcome.  Number one is 'envy' which leads to hate and class warfare.  Number two is 'intolerance' which leads to bigoted and judgmental policies.  These emotions must be replaced with a much better understanding of love, compassion, tolerance and free market economics. Freedom, when understood, brings people together. When tried, freedom is popular.

The best chance for achieving peace and prosperity, for the maximum number of people world-wide, is to pursue the cause of LIBERTY...

Full Speech Here:

Full Transcript (via Campaign For Liberty):

http://www.zerohedge.com/news/2012-11-14/unabridged-ron-paul-guide-being-libertarian

Samsung Hits Apple With 20% Price Hike (삼성, 아이폰 핵심칩 가격 인상)

As one can see in the below charts, Samsung’s performance got stronger.  The irony lies in that in a sense, Samsung’s rise may reflect a heap of increasing problems Korea has to tackle.  As discussed, the challenges Korea is facing are multi-faceted and structural in nature, and the chaebol system is a part of them.

Samsung, a symbol of Korean conglomerates, transitioned from a homegrown chaebol to a platform company, operating globally.  Despite its strong performance, they have continuously shifted its manufacturing overseas over the years.  That’s why I have argued it has been a moral choice of Samsung to offshore jobs.  Their profits are up, but jobs in Korea are gone.  Large portions of Samsung products are being manufactured outside Korea.

As with Japan’s high-tech companies and the U.S. high-tech firms for that matter, Samsung would argue that they don’t have any other choice but to outsource and offshore to remain competitive on the global stage.  And yet, profit maximization has been the name of the game.  Again, it all boils down to social considerations and moral choices given all the favorable regulations and subsidies provided to Samsung.  The necessity of globalization doesn’t outweigh moral considerations.  History has repeatedly shown us that big business hasn’t stood for the general public.

Again, we are seeing what has happened to the U.S. after most of manufacturing jobs are gone.  Apple is being made outside the U.S.  Further, while Apply has been a brand of quality and innovation that gave customers what they wanted and revolutionalized the mobile device, it has been the biggest hedge fund hotel in the world.

Like Apple is a social reflection of the U.S., Samsung may well prove that its becoming more of MNCs mirrors the rise of fall of Korea’s productive capacity.  As mentioned, Samsung has been the ultimate beneficiary of the Korean political economy as well as the global political economy dynamic.  It has been the product of Korea’s mercantilist central planning.  Samsung has also adopted the global corporate workplace model.  Both models have significant flaws.  At their extremes, both became extractive largely in the service of a small elite.

Another point to consider is the purpose of innovation/technology and its role in society at large.  In the course of rapid industrialization, it had been pursued because the elites needed a means of production.  It has served the political expediency well.  As pointed out, if innovation and technology development is geared toward promoting the broader social interest (e.g., boosting living standards of the general public) by enhancing the long-term productive capacity, therein lies a significant flaw in Korea’s chaebol-centered innovation approach.  Since the production base was rapidly built and the manufacturing jobs were created in the early decades of industrialization, people don’t seem to grasp the full picture.  The case of Samsung may have to be viewed in this context.  Samsung has been predatory and its success has impose costs on the Korean society (e.g., limiting opportunities for others).  Samsung’s technological prowess doesn’t necessarily equal Korea’s competitiveness and the so-called trickle down innovation has hardly occurred.

From MarketWatch:

Samsung Electronics , the world's largest technology firm by revenue, raised the price of mobile processor supplied to Apple Inc. AAPL -0.25% by 20% recently, Chosun Ilbo reported Monday, citing a person familiar with negotiations between the two tech giants.

"Samsung Electronics recently asked Apple for a significant price raise in (the mobile processor known as) application processor," the person was quoted as saying in the report. "Apple first disapproved it, but finding no replacement supplier, it accepted the (increase.)"

The two firms have started to reflect the new supply price recently, the report added, citing the same person.

According to the report, Apple buys all APs used for production of iPhone and iPad from Samsung Electronics with the volume estimated to be 130 million units last year and more than 200 million units this year.

Samsung Electronics has a long-term contract to supply APs to Apple until 2014, the report added.

http://www.marketwatch.com/story/samsung-hits-apple-with-20-price-hike-report-2012-11-11

조선일보로부터:

두뇌역할 AP 단가 20% 올려… 애플, 삼성 외에는 대안 없어 인상안 수용한 듯

삼성전자가 최근 애플의 아이폰·아이패드에 들어가는 최고 핵심 부품인 AP(두뇌 격의 반도체) 가격을 전격 인상한 것으로 11일 확인됐다. 인상 폭도 20% 가까이 되는 것으로 알려졌다.

삼성이 장기 고객인 애플에 대한 AP 납품 단가를 이렇게 파격적으로 올린 것은 처음 있는 일이다. 업계에서는 전 세계에서 치열한 특허 소송전을 벌이고 있는 두 회사 간 대립 구도가 이번 가격 인상으로 더 격화될 것으로 분석하고 있다.

두 회사의 협상에 정통한 전자 업계 고위 관계자는 11일 "최근 삼성이 애플에 큰 폭의 AP 가격 인상을 요구했다"며 "애플이 처음엔 난색을 표했으나 대체 발주처를 찾지 못해 결국 삼성 요구를 받아들였다"고 말했다. 이전보다 20% 정도 인상된 새로운 단가는 최근 두 회사 간 거래에 이미 반영되기 시작했다고 이 관계자는 전했다.

이번 가격 인상은 그동안 두 회사 간 납품 여부 등을 놓고 신경전을 벌였던 메모리반도체나 디스플레이(화면)와 달리, 애플이 삼성 외에는 구입할 곳이 없는 대안 부재(不在)의 제품이라는 점에서 양측 간 관계에도 상당한 파장을 낳을 전망이다. 현재 전 세계에서 애플의 요구 수준에 맞는 AP는 삼성전자만 만들고 있다.

애플은 아이폰·아이패드에 들어가는 AP를 전량 삼성에서 사가고 있으며, 그 수량이 지난해 1억3000만개를 넘어 올해는 2억개를 돌파할 것으로 예상된다. 삼성과 애플은 2014년까지 AP 장기 공급 계약을 맺어둔 상태로 일정 기간마다 형식적으로 가격 협상을 하기는 했으나, 특별한 원가 인상 요인이 없는 한 단가는 거의 그대로 유지해왔던 것으로 알려졌다.

업계에서는 삼성의 AP 가격 인상이 애플과의 소송 갈등 이외에, 애플이 삼성에 대한 AP 구입을 줄이려는 시도에 대한 반격의 성격도 담긴 것으로 보고 있다.

☞AP(Application Processor)스마트폰·태블릿PC에서 명령해석·연산·제어 등 사람의 두뇌 역할을 해주는 최고 핵심 부품(반도체).

http://biz.chosun.com/site/data/html_dir/2012/11/11/2012111101331.html

From Zero Hedge:

Since the crisis, Samsung has overwhelmed the largest 5 Japanese Tech firms...



It was not always this way...



And in context - here is AAPL...



http://www.zerohedge.com/news/2012-11-13/goodbye-japan-hello-korea

The Gini Is Out Of The Bottle: Did China "Outcapitalism" The US, Or Did America "Outcommunism" China?

From Zero Hedge:

The patriotic thing preoccupying the lucky successor to Chinese President Hu Juntao will be a simple one: how to promote the well-being, and equality among the people. After all, caring about the people is the primary preoccupation of any good communist country. As such, key concern for the new leader and his government will be the income distribution inequalities and corruption among the Chinese population, something outgoing leader Hu himself stressed. Indeed, as the most recent Chinese Gini coefficient (the measurement of inequality of income in a given society) reading shows, in China this has risen from 0.42 in 2007 to 0.48 in 2009. It is this reason why the Chinese society will have to engage in far more effective wealth redistribution because the last thing the country with no real social safety net can afford is social unrest and upheaval in a time of declining economic growth. So far so good. Where there does arise some confusion, is when juxtaposing Chinese social inequality with that of the US. Recall that China is a de facto communist country, whose society is, at least on paper, equal. One wonders, then, how it happened that US society now has a Gini coefficient that is lower than that of China: did communist China "outcapitalism" the US, or has the US simply, and quite successfully, "outcommunism" China?



http://www.zerohedge.com/news/2012-11-12/gini-out-bottle-did-china-outcapitalism-us-or-did-america-outcommunism-china

Looking Past Fiscal Cliff to Fixing Taxes

From Jesse's Cafe:

Source: WSJ
Looking Past Fiscal Cliff to Fixing Taxes
By Gerald F. Seib
Let's imagine you just landed from Mars and discovered that America's political system is in gridlock, and its economy is being held hostage. What, you would ask, is the giant problem creating all this trouble?

The big dispute, you would discover, is over whether the top individual marginal tax rate should be 35% (the rate established under George W. Bush) or 39.6% (the rate under Bill Clinton).

That is an oversimplification of the issues that are driving Washington toward the so-called fiscal cliff, of course. Still, that top rate is at the heart of the roaring economic debate.

Read the rest here.

Top 1% Share of the Wealth of the US During the same 100 Year Period

http://jessescrossroadscafe.blogspot.kr/2012/11/us-tax-brackets-spread-for-past-100.html

Japan Trade Deficit Hits Record As Relations With China Poisoned; Japan Current Account Turns Negative

Another data point indicating Japan is in trouble: Japan losing its trade surplus status and Japan's
current account  in deficit in September for the first time in more than 30 years.  Since Korea has been on a similar trajectory since their peak in terms of its debt level and deindustrialization to a significant degree, Japan's deteriorating condition should concern us all.

From Zee News:

Japan registered its biggest-ever trade deficit for a half of a fiscal year, in a sign that the sovereign debt crisis in Europe and the strained relationship with China over a territorial dispute have eroded Japanese exports, government data showed today.

For the first half of fiscal 2012 through September, Japan logged about USD 40.6 billion (3,219 billion yen) in goods trade deficit, up 90.1 percent from a year earlier and the biggest since the Finance Ministry began recording in 1979.

In September alone, the deficit stood at 558.6 billion yen, the third straight month of red ink and the largest for the month of September, the ministry said in a preliminary report, augmenting fears that violent anti-Japan rallies and boycotting of Japanese products in China have weighed on the exports to the biggest trading partner.

Exports to China fell 8.2 percent to 5,921.1 billion yen in the first half and slid 14.1 percent to 953.8 billion yen in September, sharper than the 9.9 percent fall in August. It was the fourth consecutive month of deficit as various products, ranging from auto and auto parts to steel and semiconductors, declined notably.

The balance showed Japan suffered the biggest September deficit with China of 329.5 billion yen, as imports gained 3.8 percent to 1,283.3 billion yen.

Resentment in China has accelerated since the Japanese government decided last month to nationalize part of an island group in the East China Sea, also claimed by Beijing and Taiwan.

http://zeenews.india.com/business/news/international/japan-trade-deficit-hits-record-as-relations-with-china-poisoned_62849.html

From The WSJ:

An unexpectedly sharp drop in a key measure of Japan's global economic activities has resurrected worries about how long the country will be able to sustain its crushing sovereign-debt burden.

The world's third-largest economy has run a surplus in its current account, a measure of trade in goods, services and investments, for several decades—meaning it's earning more from exports and investments abroad than it spends at home. In fact, Japan the world's biggest creditor nation.

The surplus has been in the spotlight recently, since Japan also has the developed world's biggest debt load, now nearing a quadrillion yen ($12.5 trillion)—more than double its gross domestic product. As long as the current account surplus remains, economists say, Japan is in little danger of a Greek-style crisis, since its debt is largely being funded by household savings.

While that remains the case, Japan reported Thursday that the seasonally adjusted current-account was in deficit in September—for the first time in more than 30 years. The sudden surprise drop has some economists warning that Japan's ability to generate wealth is eroding faster than expected, and its fiscal situation could be more fragile than many had thought.

The Finance Ministry says Japan won't slip into a structural current-account deficit very easily, since deficits in the trade of goods and services will be offset by huge surpluses in what the country earns on investments in overseas assets such as U.S. Treasury bonds.

But the Japan Center for Economic Research argues a structural deficit in could be as close 2017, noting fuel-import levels are likely to stay high if most nuclear plants stay off.

The Japan Research Institute, another think tank, says a structural deficit could start in 2022 if crude oil prices keep rising. Hideki Matsumura, an economist with the institute, said it could come earlier if the current strong-yen trend, which hurts Japan's ability to sell overseas, continues.

"Many countries are catching up with Japan in the manufacturing field," he said. "If they can produce similar products for a cost 20% to 30% less than Japanese do, Japan will soon find no demand for its products."

http://online.wsj.com/article/SB10001424127887323894704578105692038411194.html

Apple Begins iPhone 5S, iPad, Apple TV Pre-Production For Early 2013

Are the major technology-driven companies experiencing "technological stagnation"?

From Computerworld:

Does this mean Apple’s been listening to critics demanding it innovate against its seemingly imitative Android competitors? Does this mean it intends raising the frequency of iPhone releases in order to stay near the head of the pack?

It’s possible.

Digitimes reckons the iPhone 5S could enter volume production in the first quarter of 2013. However, I recall a seven month gap between initial claims of the iPhone 5 entering production and its eventual appearance, so I’m speculating a June/July introduction on strength of the title’s claims.

Keeping that iPhone 5 production line moving has been problematic for Foxconn, where Chairman Terry Gou said: “It’s not easy to make the iPhones. We are falling short of meeting the huge demand.”

It seems far too soon for fresh iPhone rumors to hit the street, for a start Apple has remained pretty focused on an annual release; secondly the iPhone 5 has only been available for two months.

Conversely, it’s possible company management have decided to introduce new versions of the iPhone more frequently and perhaps striking back against the fragmented Android device market by diversifying its iDevice range.

All the same it seems highly improbable that Apple intends introducing an all-new iPhone within the next four months -- rumors like these tend to deflate sales of Apple’s current model.

The latter even makes it possible that those in competition with Apple may be attempting to seed the market with such rumors in an attempt to stifle Cupertino’s smartphone sales.

There is one other possibility: Apple may be on course to introduce a new breed of iPhone, not intended to compete with the classic model, but to widen the market with the release of a different kind of device.

http://blogs.computerworld.com/smartphones/21316/report-apple-begins-iphone-5s-ipad-4-apple-tv-pre-production-early-2013

"Be still, and know, that I am God."
Psalm 46:10

우석훈 교수: 안철수 후보의 금융공약은 "최악 중의 최악 공약"

The below article touches upon some critical issues Korea has faced.

Korea is at a critical juncture.  Korea went though the 1997 financial crisis which shook the entire nation.  Korea should have taken their medicine and had it done and over with.  And yet, it hasn’t.  Thanks to the global boom and bubbles, Korea has maintained the trade surplus to keep the ponzi game going.  This time around, many other countries are facing the sovereign debt crisis and aggregate demand is collapsing.  Perhaps that’s why many are greatly concerned about the upcoming presidential election in December.

In terms of political reform, as with Japan, politicians are the public face of the government.  In a sense, the bureaucratic/corporate elites run the country.  So any genuine reform effort must address this.  Otherwise, any political reform would be short-lived.

Korea still has a weak financial system.  The Korea’s banking system was overleveraged with corporate loans around 1997.  It is now overleveraged with household loans.  This is largely the result of bad policies.  Moreover, Korea was pressed to liberalize its financial market and deregulated it rapidly after 1997.  The politicians aren’t in charge over its central bank.  How would Korea deal with a globalist dynamic?

We sincerely hope that any presidential candidate would see through the current state of the global economy and the true picture of Korea’s economic/political/social conditions. Whoever gets elected, it won’t be easy to address the problems Korea has, yet s/he must face them with a high level of integrity.

아시아 경제로부터:

'88만원 세대'의 저자로 알려진 우석훈 성공회대 교수가 금융위원회 해체를 골자로 하는 안철수 무소속 후보의 금융공약을 "최악 중의 최악 공약"이라고 비판하며 "나의 지도자가 아니다"라고 지지 철회선언을 했다.

대표적인 진보 경제학자인 우 교수는 9일 자신의 블로그에 '안철수, 나의 지도자는 아니다'라는 제목의 글을 올려 "안 후보의 금융정책은 금융민주화와 금융공공성 없이 모피아 프레임에 갖혔다"고 지적했다. 모피아’란 옛 재무부(MOF·Ministry of Finance)와 마피아(Mafia)의 합성어로 재무부(현 기획재정부) 출신 경제 관료들의 권력과 조직력을 마피아에 빗대 표현한 말이다.

지난 4일 안 후보 측 경제민주화포럼의 장하성 국민정책본부장은 금융감독 유관기관 및 민간 전문가로 구성된 합의제 행정위원회인 금융안정위원회를 신설하겠다는 금융 공약을 발표했다.

또 금융위원회를 폐지하고, 그 기능을 기획재정부와 금융감독원에 이관하며, 금감원을 분리해 금융건전성감독원과 금융시장감독원을 신설하겠다고 밝혔다.

우 교수는 "지금 안철수 안대로 가면 예전의 재무부를 다시 만들고, 거기에 경제기획원의 총괄기능에 예산 기능까지 갖는 초대형 블록버스터급 '모피아만세'가 생긴다"며 "박정희 유신경제보다 더 이상한 경제통치체계, 금융 관리 체계로 가게 된다"고 주장했다.

이에 대해 안철수 캠프 관계자는 "사안마다 일일히 대응하지 않는 것이 캠프 내 원칙"이라며 "노코멘트"라고 답했다.

앞서 안 후보가 금융공약을 발표하자 진보성향의 시민단체들이 잇따라 문제제기를 하기도 했다.

전국사무금융서비스 노동조합은 지난 5일 "금감원을 분리해 두 개의 감독원을 두겠다는 발성은 우리경제 금융과 나아가 국민경제를 볼모로한 모피아의 자리늘리기 시도로 밖에 볼수 없다"고 비판했다.

투기자본감시센터도 “과거에도 ‘금융정책협의회’란 기구가 동일한 역할을 담당했지만 다수의 금융관료가 주도권을 쥐고 소수의 금융자본 대리인인 민간 전문가들이 밀실에서 주요 금융현안을 파행적으로 결정했다”고 지적했다.

http://view.asiae.co.kr/news/view.htm?idxno=2012110918385661783&nvr=Y

California's Liberal Supermajority: Taxpayers Will Get All the Government They Ever Wanted

This is a rather important article especially for those who reside in California and businesses that operate there.  I used to live in the Bay Area.  It's disheartening to see California sinking like this. 

From the Wall Street Journal :

The main check on Sacramento excess has been a constitutional amendment requiring a two-thirds majority of both houses to raise taxes. Although Republicans have been in the minority for four decades, they could impose a modicum of spending restraint by blocking tax increases. If Democratic leads stick in two races where ballots are still being counted, liberals will pick up enough seats to secure a supermajority. Governor Jerry Brown then will be the only chaperone for the Liberals Gone Wild video that is Sacramento.

The high Democratic turnout in moderate and right-leaning districts helped the party pick up three seats in the senate and four in the assembly.

So now Californians will experience the joys of one-party, union-run progressive governance. Mr. Brown is urging lawmakers to demonstrate frugality and the "prudence of Joseph." As he said the other day, "we've got to make sure over the next few years that we pay our bills, we invest in the right programs, but we don't go on any spending binges." That's what all Governors say. Trouble is, merely paying the state's delinquent bills will require tens of billions in additional revenues if lawmakers don't undertake fiscal reforms.

With no GOP restraint, liberals can now raise taxes to pay for all this. They'll probably start by repealing Proposition 13's tax cap for commercial property. Democrats in the Assembly held hearings on the idea this spring. Then they'll try to make it easier for cities to raise taxes.

The greens want an oil severance tax. Other Democrats want to extend the sales tax to services, supposedly in return for a lower rate, but don't expect any "reform" to be revenue neutral. Look for huge union pay raises and higher pension benefits.

The silver lining here is that Americans will be able to see the modern liberal-union state in all its raw ambition. The Sacramento political class thinks it can tax and regulate the private economy endlessly without consequence. As a political experiment it all should be instructive, and at least Californians can still escape to Nevada or Idaho.

http://online.wsj.com/article/SB10001424127887324894104578106941506837334.html

Following Japanese Models?

This post argues how the U.S. is following the Japanese model.  It's not just the U.S.   As pointed out many times, Korea and China were modeled after Japan.  The similarities between Korea and Japan are so there in terms of export-dependent industrialization strategy, technology accumulation trajectory, financial bubbles, deindustrialization, currency conundrum, demographic changes, policy mistakes (e.g., monetary policy), etc.  Hence, what Japan faces should concern us greatly, and we should heed the lesson of post bubble Japan.

From Zero Hedge:

Perhaps those sage English philosophers 'The Vapors' were on to something 32 years ago when they asked if we were "Turning Japanese" for it seems the following charts from Nomura certainly suggest the US bond market is heading in that direction. From demographics to monetary policy; from investor allocations to flows; and from bond bubbles and volatility to long-term interest-rate paths, it seems we share a lot more than a love for sushi and pachinko with our neigbours across the ocean as we seem to be chasing after many Japanese models (of asset allocation and macro-economics).

http://www.zerohedge.com/news/2012-11-08/following-japanese-models

Foodstamps Surge By Most In One Year To New All Time Record, In Delayed Release

The U.S. seems to become more socialist.  History has shown that a society which depends on government too much ends badly.

From Zero Hedge:

While there had been speculation that the BLS may delay the release of its October nonfarm payroll number until after the election, it turned out there was no reason to worry. Perhaps this is because the number, while at stall speed, was not quite as horrible as some had expected (even if the change in average hourly earnings did tumble to new all time lows) and so boosted Obama's reelection chances. There was, however, another closely tracked number which perhaps is far more indicative of the economic "growth" in the past 4 years, which certainly had a delayed release. The number of course is that showing how many Americans are on foodstamps, and usually is released at the end of the month, or the first day or two of the next month. This time the USDA delayed its release nine days past the semi-official deadline, far past the election, and until Friday night to report August foodstamp data. One glance at the number reveals why: at 47.1 million, this was not only a new all time record, but the monthly increase of 420,947 from July was the biggest monthly increase in one year. One can see why a reported surge in foodstamps ahead of the elections is something the USDA, and the administration may not have been too keen on disclosing.

 http://www.zerohedge.com/news/2012-11-10/foodstamps-surge-most-one-year-new-all-time-record-delayed-release

Ron Paul: New Beginning; "Pure Democracy Is Dangerous"... When It's Purchased

I think the regular readers would know what Ron Paul has stood for and why many Americans with the right perspective have supported him.

From Zero Hedge:

America is over $16 trillion in debt. The “official” unemployment rate still hovers around 8%.

Our federal government claims the right to spy on American citizens, indefinitely detain them, and even assassinate them without trial.

Domestic drones fly over the country for civilian surveillance.

Twelve million fewer Americans voted in 2012 than in 2008, yet political pundits scratch their heads.
It’s not hard to see why, though.

To go along with endorsing a never-ending policy of bailouts, “stimulus packages,” and foreign military adventurism, the establishment of neither major party questions the assaults on Americans’ liberties I’ve named above.

As my campaign showed, the American people are fed up. Many realized heading into Tuesday that regardless of who won the presidential election, the status quo would be the real victor.

GOP leadership is now questioning why they didn’t perform better.

They’re looking at demographic changes in the United States and implying minorities can only be brought into the party by loudly advocating for abandoning what little remains of their limited government platform and endorsing more statist policies.

My presidential campaign proved that standing for freedom brings people together.

Liberty is popular – regardless of race, religion, or creed.

As long as the GOP establishment continues to not only reject the liberty message, but actively drive away the young, diverse coalition that supports those principles, it will see results similar to Tuesday’s outcome.

A renewed respect for liberty is the only way forward for the Republican Party and for our country.

I urge all my Republican colleagues to join the liberty movement in fighting for a brighter future.

http://www.zerohedge.com/news/2012-11-11/ron-paul-new-beginning

From Zero Hedge:

From an outright libertarian, the headline seems contrary; but Ron Paul's affirmation that "pure democracy is dangerous" critically confirms what Romney accidentally admitted: that enabling the majority to dictate the minority is a problem when the majority are receiving a [government] check. Bloomberg TV's Betty Liu looks a little shocked when the thoughtful Paul confirms bluntly that the reelection of Obama is driven simply by 'the people' being on the 'receiving end' of government benefits and that the US is "so far gone; we're over the cliff already." From the lack of credibility in Washington to GOP's 'acceptance' of higher taxes and why he quit Congress, Ron Paul succinctly reminds many of the true state of the union in which we live... "As long as you think we have to please the world and run this welfare state, all we will argue about is who will get the loot."

http://www.zerohedge.com/news/2012-11-08/ron-paul-pure-democracy-dangerous-when-its-purchased

The Distribution of Economic Pain From the Financial Crisis in One Chart

The same phenomena (the diminishing middle class, financial bubble as a wealth transfer mechanism, policy failure) Jesse discussed in the below post have occurred in many parts of the world including Korea.  

The middle class is the backbone of a nation.  The more wealth gets concentrated in the hands of a few, the more corruption and malinvestment/misallocation occur, undermining the economy and hindering democracy.

From Jesse's Cafe:

No wonder the wealthiest ten percent feel so clever and even triumphant.

The collapse caused by the widespread banking fraud has barely affected them, whereas it wiped out most of the last ten years of growth in the middle class and the poor.

In my considered opinion this is largely the result of policy and tax decisions that have been made by the government over the past twenty or more years, in which they fostered a financially predatory economy.

Financial bubbles are often wealth transfer mechanisms, and in this case it appears that you can also keep what you kill.

From Amir Sufi, Professor of Finance at the University of Chicago.

Net Wealth Shock in US, by Net Worth Percentile

http://jessescrossroadscafe.blogspot.kr/2012/11/the-distribution-of-economic-pain-in.html

Galaxy S3 takes No. 1 Position In Smartphone Market

From Reuters:

Samsung Electronics' Galaxy S3 became the world's best-selling smartphone model last quarter, pushing aside Apple Inc's iPhone, which has dominated the chart for more than two years, research firm Strategy Analytics said on Thursday.

Strategy Analytics estimated Samsung sold 18 million S3 models in the third quarter, compared with iPhone 4S sales of 16.2 million.

Strong sales of the flagship Galaxy S3 - which comes with a large 4.8 inch touchscreen - helped Samsung post a record $7.3 billion operating profit in the July-September quarter.

"Samsung's Galaxy S3 has proven wildly popular with consumers and operators across North America, Europe and Asia," said analyst Neil Mawston, adding the new iPhone 5 would likely reclaim the top spot for Apple in the current quarter.

http://finance.yahoo.com/news/galaxy-s3-takes-no-1-103300743.html

Apple Enters Gravtitational Singularity As Hedge Fund Hotel Evacuation Begins

From Zero Hedge:

AAPL had crawled it way into the green in the pre-open, bumping around yesterday's closing VWAP. In the early minutes of the US day session open, we saw very heavy selling volume in AAPL (and surprisingly S&P 500 futures ramped vertically). This smells a lot like someone getting a tap on the shoulder on their 'hedged' Long AAPL, Short ES position. AAPL bounced off yesterday's lows to get back to VWAP and then the real selling began... At $542 now, AAPL is over $160 off the highs and reverting back to the market cap of the entire European banking system. With 230 hedge funds holding this angel of death... small doors and large crowds do not mix... paging Topeka? Widows, orphans, and value investors first...

http://www.zerohedge.com/news/2012-11-08/apple-enters-gravtitational-singularity-hedge-fund-hotel-evacuation-begins

Europe's Scariest Chart Hits Peak Scariness Levels, And Rising

From Zero Hedge:

Things are rather unsurprisingly going from worse to worserer in Europe. Perhaps it is the anecdotal evidence we see in the now weekly riot-cams from Spain and Greece but just as we warned over a year ago, the truly scariest chart in Europe remains that of youth unemployment. The correlation (and causation) that runs from extreme levels of youth unemployment to general social unrest and anarchy is stunning throughout time (as we noted here and here). With Greek 'youth' unemployment jumping to a disheartening 58% (for August) - by far its highest ever - and Spain rising inexorably at 54.2%, the under-25 populations in these nations is truly set to burst (with overall unemployment rates of 25.4% and 25.5% respectively). Euro-zone youth unemployment overall has risen to 23.3% and while Greece jumped the most, Italy was close behind with a 1.2ppt rise to 35.1%. We are sure the austerity voted for last night by the politicians will 'help' - someone...



Data: Bloomberg and Greek Statistics Office