As Goes China, So Goes The World?

From Zero Hedge:

While China depends on only one nation for 15% or more of its exports (US 17.3%), Bloomberg's Michael McDonough notes that an incredible 35 nations depend of China for at least 15% of the exports; up from just 4 in 2001. Most are emerging markets or major commodity producers with the shift being driven by China's demand for raw materials, fueled by its investment-led growth model and the stimulus package following the global financial crisis. This gross dependence leaves the world's economy increasingly susceptible to shifts in the Chinese business cycle - most notably Australia which relies on China for a massive 30% of its export demand. This is almost double the next largest developed nation of Japan (which relies on China for 18.5% of its exports) though tensions between the two nations has led to an almost 10% decline in Chinese imports of Japanese goods since September. As we have noted, China has become a key source of FDI in Africa in recent years and 12 of the 20 most-China-dependent economies are from that continent; but as China attempts to transition from investment toward consumption, demand for commodities may slow and downside risk grows for these dependent commodity-producing nations.



Charts: Bloomberg Briefs

http://www.zerohedge.com/news/2013-02-26/goes-china-so-goes-world-and-definitely-australia

Andy Lees: "Emerging Markets Unable To Continue The Heavy Lifting"

From Zero Hedge:

After his departure from UBS, Andy Lees went radiosilent while setting up his own research company, AML Macro. We are now happy to be able to bring to our readers' the occasional report from Lees, who has traditionally been one of our favorite macro analysts, and whose insights are usually months ahead of the maintstream.

In the last few days we have seen reports suggesting Brazilian household debt and service payments are weighing on growth, that Southeast Asia’s commercial credit is approaching its pre-1997 financial crisis peak of 75% GDP, and that South Korea’s household debt has reached 164% of disposable income compared with 138% in the US at the start of the housing crisis. Chinese debt rose 15% in excess of GDP last year from 191% to 206%. Its corporate cash flow is around 50% of profitability whilst loan growth is way in excess of the banks’ return on equity meaning the growth is dependent on a continual supply of new capital to the banks. Over the last few years whilst the developed economies have struggled to reduce their debt relative to GDP – (the most successful of the major economies has probably been the US which has taken non-financial sector debt down from a high of 253.15% GDP to 248.18% GDP) – the developing economies have taken advantage of cheap funding to inflate their debt levels dramatically, leaving the global debt position worse than in 2007.. Some of the emerging market debt is relatively small and the necessary rebalancing of the economy should be relatively easy to achieve, but even if it is only a cyclical limit as oppose to the structural limits of the developed economies, it is coinciding at the same time and will add to the global problem. As data on world GDP growth would suggest, it is not just Brazil where the numbers show “the exhaustion of a growth model based on consumption”.


World GDP Growth

http://www.zerohedge.com/news/2013-02-24/andy-lees-emerging-markets-unable-continue-heavy-lifting

South Korea Starts Currency War Rumblings; Has Japan In Its Sights

From Zero Hedge:

While the rest of the developed (read trade deficit) world's foray into the currency wars was completely predictable and expected, there was one country that had so far kept very silent on the topic of Japan's attempts to crush its currency: its main export competitor, South Korea. Recall that for this Asian nation exports are everything, and as Yonhap reminds us, "exports of goods and services amounted to 538.5 trillion won (US$506 billion) in the January-September period, or 57.3 percent of the nation's gross domestic product (GDP), according to the data by the Bank of Korea. The reading was higher than 56.2 percent tallied for all of 2011 and the highest since the central bank began compiling related data in 1970, and South Korea's exports accounted for 13.2 percent of its GDP." The reason for South Korea's relative silence is that, as we showed yesterday, in the global race to debase launched with the end of the Bretton Woods, it was the undisputed leader, outdoing even the US. Moments ago South Korea may have just had enough and broke the seal on its code of silence. As Reuters reports, "South Korea said that while the Group of 20 nations at their meeting last weekend did not single out Japan for monetary and fiscal measures that have weakened the yen, the group did not exactly endorse Japan's quantitative easing policy, which in fact stirred controversy."



http://www.zerohedge.com/news/2013-02-19/south-korea-starts-currency-war-rumblings-has-japan-its-sights

Park’s Agenda Has Five Top Priorities: Transition Team’s Road Map Doesn’t Mention ‘Economic Democratization’

From Joongang Daily:

The incoming Park Geun-hye administration announced a road map to a “new era of people’s happiness and hope” with five major initiatives.

On the eve of Park’s inauguration Monday, her transition team concluded its 48 days of work by saying the five major policy goals for the new administration will be building an innovative economy focused on job creation; providing targeted welfare and job programs; enriching people’s lives with creative education and culture; creating a society that is safe and unified; and establishing the foundation for an era of unification.

At a press conference, Kim Yong-joon, the head of presidential transition committee, announced those five goals, 21 strategies, 140 tasks and 210 specific action plans to realize the president-elect’s vision.

“Although Korea’s economy has grown large, the happiness of individual citizens is low,” Kim said. “To effectively realize this vision and agenda, the government, above everything, must be trusted by the people. The Park administration will win public trust by communicating with the people to maximize its driving force to push forward the policies with integrity and transparency.”

To create an innovative economy focused on job creations, Kim said, the Park government will use imagination and creativity and encourage convergence among industries.
For the goal of targeted welfare, the government will help the general public by boosting employment.

In order to build the foundation for unification, the Park administration will promote trust building between the two Koreas while strengthening the national defense posture, Kim said.

According to the transition team, 210 bills need to be passed to realize the administration’s agenda. The new administration will prepare more than 150 of them before the end of this year.

The road map announced yesterday included some specifics, including a new pension for senior citizens over 65 and a plan to shut down the powerful Central Investigation Unit of the Supreme Prosecutors’ Office.

Conspicuously missing, however, was any follow-through on Park’s campaign pledges to pursue “economic democratization.”

Yoo Sung-kull, who was in charge of economic affairs for the transition team, said the term was not used in the road map, but the philosophy was reflected in many specific tasks.

Representative Lee Hyun-jae, another economics consultant in Park’s transition team, said yesterday that the key to economic democratization was to stop the power abuse by conglomerates while protecting the small- and medium-sized enterprises.

“To this end, we give power to the Small and Medium Business Administration, Board of Audit and Inspection and Public Procurement Service to bring legal cases against conglomerates,” Lee said. “Various support measures for small companies also reflect the idea of economic democratization.”

The so-called economic democratization, which is mentioned in Korea’s Constitution as a national goal, was one of the three major pledges when she declared her presidential bid in July last year. The other two were more jobs and welfare benefits. Economic democratization was a source of friction in the transition team. Some people on the team thought economic growth was more important, including Saenuri’s floor leader, Lee Hahn-koo.

Kim Chong-in, co-chair of Park’s presidential campaign, was a proponent of polices for economic democratization. Kim did not get a senior post in the Park government or Blue House, and analysts think that strong measures against the chaebol are not likely.

Hyun Oh-seok, Park’s nominee to become the deputy prime minister for economic affairs, and Cho Won-dong, senior presidential secretary for economic affairs, are known to favor growth-oriented policies. Economists showed mixed reactions to the absence of economic democratization in her road map. “Economic democratization was really just a populist pitch for the campaign period,” Cho Dong-ken, economics professor of Myongji University, told the JoongAng Ilbo.

Kim Sang-Jo, professor of economics at Hansung University, disagreed. “It was the biggest topic during the legislative and presidential elections,” Kim said. “It is very disappointing to exclude it from the five major agenda items.”

'약속·신뢰' 강조하던 朴 당선인, 무슨 이유로…● 경제민주화 표현 사라지고…성장·일자리가 핵심 화두
● 박근혜 정부 국정 로드맵 … 5대 목표, 21개 전략, 140대 과제
● 대기업 개혁 일부 내용은 포함
● 비정규직 차별 10배 보상도 빠져
● 군복무 단축은 중장기로 후퇴

앞으로 5년간 박근혜 정부가 추진할 과제를 담은 국정 로드맵이 21일 공개됐다. 대통령직인수위원회는 새 정부의 국정비전을 ‘국민행복, 희망의 새 시대’로 확정하고 ▶일자리 중심의 창조경제 ▶맞춤형 고용·복지 ▶창의교육과 문화가 있는 삶 ▶안전과 통합의 사회 ▶행복한 통일시대의 기반구축을 5대 국정목표로 선정했다. 이를 뒷받침할 21개 전략과 140대 국정과제도 내놨다.

　새 정책을 생산했던 과거와 달리 이번 인수위의 로드맵은 박 당선인의 대선 공약을 가다듬는 정도에 그쳤다. 하지만 선거기간 중 박 당선인이 강조했던 것에 비해선 변화된 부분도 있었다.

　우선 ‘경제민주화’란 표현이 사라졌다. 대신 ‘성장’을 더 강조했다. 경제 부문의 6개 전략 중 5개가 성장 관련 내용이었다. 경제성장률 전망이 3%를 밑도는 저성장 국면에서 일자리 창출을 위해선 성장이 급선무라고 판단한 것으로 풀이된다. 이를 두고선 ‘말 바꾸기’ 논란이 일었다. 박 당선인은 지난해 1월 한나라당에서 새누리당으로 당명을 바꾸면서 정강·정책에 경제민주화를 넣었다. 또 지난해 7월 대선 출마를 선언하면서 밝힌 국민행복을 위한 3대 핵심 과제 중 첫째가 경제민주화였다. 대선 공약집에도 경제민주화라는 표현은 아홉 번이나 포함됐다. 하지만 이날 발표된 로드맵 어디에도 ‘경제민주화’라는 표현은 보이지 않았다.

　경제민주화 공약을 진두지휘했던 김종인 전 국민행복추진위원장은 “새 정부의 국정 로드맵에 대해 이러쿵저러쿵 얘기할 입장이 아니다”면서도 “경제민주화는 성장과 동시에 하는 것이지 따로 하는 게 아니다”고 말했다. 그러면서 “박 당선인의 정직성을 믿는다. 시대의 흐름과 선거 과정에서 한 약속을 생각하면 경제민주화는 (실천을) 안 할 수가 없다”고 했다. 민주통합당 박용진 대변인은 “대선 기간 박 당선인은 경제민주화를 시대적 과제라고 했었는데 당선되고 보니 시대과제가 뒤바뀐 것이냐”며 “약속 위반 정치인들의 전형적인 조삼모사, 치고 빠지기 구태정치의 오래된 변명일 뿐”이라고 비판했다.

　이에 대해 인수위는 “(경제민주화 표현은 없지만) 이제까지 논의됐던 경제민주화 공약 내용은 모두 들어가 있다. 경제민주화 의지와 실천방향은 전혀 변화가 없다”(류성걸 경제1분과 간사)고 반박했다.

　그간 박 당선인과 새누리당이 약속했던 하도급 거래관행 개선, 징벌적 손해배상제, 공정위 전속고발권 폐지, 대기업 지배주주의 사익편취행위 근절 등 경제민주화 관련 내용을 로드맵에 담았다. 하지만 내용을 구체적으로 뜯어보면 대선 전에 비해 강도가 약해진 경우가 많았다. 박 당선인은 지난해 12월 10일 대선 TV토론 당시 “비정규직 차별 해소를 위해 대표시정제도와 징벌적 금전보상제도를 도입하겠다”며 “회사가 차별을 반복할 경우에는 손해액 10배를 금전으로 보상하도록 하겠다”고 했었다. 그러나 이날 로드맵의 비정규직 차별해소 부분에는 대표시정제도와 10배 징벌적 금전보상 등 구체적 제도가 빠진 대신 ‘비정규직 고용안정 및 정규직 전환 가이드라인’ 제정 등만 언급됐다.

　또 2015년부터 공공기관의 비정규직 근로자를 정규직으로 전환하겠다던 공약과 달리 로드맵에는 전환시기를 따로 정해 놓지 않았다. 대선 때 핵심 구호로 쓰였던 ‘중산층 70% 재건’이란 표현도 사라졌다. 이와 함께 가계부채를 해결하기 위해 내놨던 18조원 규모의 ‘국민행복기금’ 설립방안도 구체적인 방안이 전혀 제시되지 않았다.

　민감한 현안에 대해선 뾰족한 대책을 내놓지 못했다는 지적도 나온다. 인수위는 연내에 대검 중수부를 폐지하겠다고 하면서도 검찰과 경찰의 이해관계가 첨예하게 대립되는 수사권 조정 문제에 대해선 결론을 내리지 못했다. 또 입지선정을 놓고 지역갈등이 불거졌던 신공항 문제에 대해서도 “새 정부가 출발하면 점검해 나갈 계획”이라고만 밝혔다. 박 당선인이 대선 전날 전격적으로 내놓은 ‘임기 내’ 병사 군복무 기간 18개월 단축도 ‘중·장기적 추진’으로 후퇴했다. 통신비 부담완화를 위해 이동통신 가입비를 폐지하겠다던 공약은 ‘2015년까지 폐지를 유도하겠다’로 바뀌었다.

http://koreajoongangdaily.joinsmsn.com/news/article/article.aspx?aid=2967541

Memo To Japan: It Is Going To Be A Cold, Expensive Winter

From Zero Hedge:

While Abenomics has failed in spurring exports, while the rise in the Nikkei has benefited some 1-2% of the population, the most direct consequence of crushing the yen some 20% is that energy costs, virtually all of them imported, are if not surging, then about to soar to all time highs.  In other words, our sincerest condolences to Japan, for whom this winter will be a very cold one (and a very hot summer follows), unless of course in Japan, like in the US, energy costs don't matter when calculating CPI and inflation and the consumer can spend any amount to keep themelves warm, or cold as the case may be.

http://www.zerohedge.com/news/2013-02-23/memo-japan-it-going-be-cold-winter

Saxo Bank CEO Says Euro Is Doomed as Currency Woes Resurface

From Zero Hedge:

Lars Seier Christensen, co-chief executive officer of Danish bank Saxo Bank A/S, said the euro’s recent rally is illusory and the shared currency is set to fail because the continent hasn’t supported it with a fiscal union.

“The whole thing is doomed,” Christensen said yesterday in an interview at the bank’s Dubai office. “Right now we’re in one of those fake solutions where people think that the problem is contained or being addressed, which it isn’t at all.”
  
“I’d be a bigger seller of the euro at anything near 1.4,” according to Christensen, who said he isn’t making any speculative bets against the currency.
  
“Another possible fallout is getting rid of some of the countries that are being ruined by being in the euro, notably the southern European economies,” Christensen said. “People have been dramatically underestimating the problems the French are going to get from this. Once the French get into a full- scale crisis, it’s over. Even the Germans cannot pay for that one and probably will not.”
  
Public-sector debt is at record levels, having more than doubled from 40 percent of gross domestic product in 2008. The European Commission, which is due to update its forecasts this week, sees it rising to 97.1 percent of GDP next year.

“It’s the political world that has been extremely supportive of the euro, not for economic reasons but for political reasons,” said Christensen, a long-time critic of the single currency who now lives in Switzerland.

http://www.bloomberg.com/news/2013-02-17/saxo-bank-ceo-says-euro-doomed-as-single-currency-woes-resurface.html

These 10 Stocks Account For Over 20% Of The S&P 500's Market Cap

From Zero Hedge:

The S&P 500 represents the broad US equity market. It is the bogey for countless herding asset managers and is seen as the professional's index as opposed to retail's Dow. But, a scratch under the surface of the magnificent 500 company index shows it to be extremely top-heavy. From Intel to Apple, the following 10 companies represent over 20% of the 500 name index - and these 20 stocks account for 42% of all S&P 500 margin.



Source: Goldman Sachs

http://www.zerohedge.com/news/2013-02-18/these-10-stocks-account-over-20-sp-500s-market-cap

Japan Welcomes Abenomics With Record Unadjusted Trade Deficit In January

From Zero Hedge:

We may have this centrally-planned, currency-debasement driven economic stimulus thing backwards, but unless we are very wrong, in January, Japan was not supposed to post a record unadjusted trade deficit, amounting to some ¥1,628.4 billion, or nearly ¥300 billion more than the expected ¥1,379 billion deficit. And while exports did rise more than the 5.6 expected, at 6.4%, it was imports which printed at 7.3%, that destroyed expectations of a modest 2.1% rise, and which were likely all energy related.  Which means that Japan is happily importing the rest of the world's inflation and getting precisely nothing to show for it. Then again, the central planners are smart folks. They have PhD's. They are certainly on top of this.

http://www.zerohedge.com/news/2013-02-19/japan-welcomes-abenomics-record-unadjusted-january-trade-deficit

Norway Enters The Currency Wars

From Zero Hedge:

While the G-20 and the G-7 haggle among each other, all (with perhaps the exception of France) desperate to make it seem that Japan's recent currency manipulation is not really manipulation, and that the plunge in the Yen was an indirect, "unexpected" consequence of BOJ monetary policy (when in reality as Richard Koo explained it is merely a ploy to avoid the spotlight falling on each and every other G-7/20 member, all of which are engaged in the same type of currency wars which eventually will all morph into trade wars), Europe's energy powerhouse Norway quietly entered into the war. From Bloomberg: "Norges Bank is ready to cut interest rates further to counter krone gains that interfere with the inflation target, Governor Oeystein Olsen said. “If it gets too strong over time, leading to inflation that’s too low, we will act,” Olsen said yesterday in an interview at his office in Oslo.

http://www.zerohedge.com/news/2013-02-17/norway-enters-currency-wars

Daniel Lin: How Do We Break The Cycle Of Higher Tuition And More Debt?

From Zero Hedge:

As we have discussed in detail (here, here, and most recently here), many college students face repaying a mountain of debt upon graduating, and many college graduates end up working jobs that don't require a degree. Even worse, 40 percent of college students drop out without earning a degree, but that does not free them from the debt they have accumulated. In this brief clip, Professor Daniel Lin argues - rightly - that government subsidies are to blame for the continually rising costs of higher education. Although such subsidies are supposed to help defray college costs, they are making the situation worse. A policy that worsens the problem it is supposed to fix should be eliminated - even if it is the government's only credit inflating tool left.

http://www.zerohedge.com/news/2013-02-20/guest-post-how-do-we-break-cycle-higher-tuition-and-more-debt

On the 70th Anniversary of the Death of Sophie Scholl, 22 February 1943

From Jesse's Cafe:

"Many people think of our times as being the last before the end of the world. The evidence of horror all around us makes this seem possible.

But isn't that an idea of only minor importance? Doesn't every human being, no matter which era he lives in, always have to reckon with being accountable to God at any moment? Can I know whether I'll be alive tomorrow morning?

A bomb could destroy all of us tonight. And then my guilt would not be one bit less than if I perished together with the earth and the stars.”

Sophie Scholl


"Love does not make you weak, because it is the source of all strength, but it makes you see the nothingness of the illusory strength on which you depended before you knew it."

Léon Bloy

As you know, I have been commemorating the anniversary of Die Weiße Rose, the Munich Students Movement, and the series of leaflets which they produced and distributed in Nazi Germany as a statement of conscience during the height of the reign of terror.

I do not think it is possible for any one of us to genuinely appreciate the courage it takes to do something like this. And I hope that we never do come to understand such an extraordinary vocation to the same degree.  But each one of us is called to act, in our own way, and in our own time.

“The real damage is done by those millions who want to 'get by.'   The ordinary men who just want to be left in peace. Those who don’t want their lives disturbed by anything bigger than themselves. Those with no sides and no causes. Those who won’t take measure of their own strength, for fear of antagonizing their own weakness. Those who don’t like to make waves—or enemies.

Those for whom freedom, honour, truth, and principles are only literature. Those who live small, love small, die small. It’s the reductionist approach to life: if you keep it small, you’ll keep it under control. If you don’t make any noise, the bogeyman won’t find you.

But it’s all an illusion, because they die too, those people who roll up their spirits into tiny little balls so as to be safe. Safe?! From what? Life is always on the edge of death; narrow streets lead to the same place as wide avenues, and a little candle burns itself out just like a flaming torch does. I choose my own way to burn.”

Sophie Scholl

What is surprising is not that we are called to do so much, but rather, so little.  Love and be grateful to God, treat people as you would like to be treated with respect, kindness, and forgiveness.  Do not lie or steal or cheat,  do not be proud and look down on your fellow creatures, and act with honor and respect for the gifts of His creation. And when we fail through weakness, we are readily forgiven. 'Can you not watch with me, for even one hour?'

But all too often we bargain away our souls, rebelling from even these slight and reasonable requests-- and for so little.

The White Rose
Second Leaflet
Munich, 1942

We will not be silent.

It is impossible to engage in intellectual discourse with National Socialist philosophy, for if there were such an entity, one would have to try by means of analysis and discussion either to prove its validity or to combat it. In actuality, however, we face a totally different situation.

At its very inception this movement depended on the deception and betrayal of one's fellow man; even at that time it was inwardly corrupt and could support itself only by constant lies. After all, Hitler states in an early edition of "his" book (a book written in the worst German I have ever read, in spite of the fact that it has been elevated to the position of the Bible in this nation of poets and thinkers): "It is unbelievable, to what extent one must betray a people in order to rule it."

If at the start this cancerous growth in the nation was not particularly noticeable, it was only because there were still enough forces at work that operated for the good, so that it was kept under control. As it grew larger, however, and finally in an ultimate spurt of growth attained ruling power, the tumor broke open, as it were, and infected the whole body.

The greater part of its former opponents went into hiding. The German intellectuals fled to their cellars, there, like plants struggling in the dark, away from light and sun, gradually to choke to death.

Now the end is at hand. Now it is our task to find one another again, to spread information from person to person, to keep a steady purpose, and to allow ourselves no rest until the last man is persuaded of the urgent need of his struggle against this system. When thus a wave of unrest goes through the land, when "it is in the air," when many join the cause, then in a great final effort this system can be shaken off.

After all, an end in terror is preferable to terror without end.

We are not in a position to draw up a final judgment about the meaning of our history. But if this catastrophe can be used to further the public welfare, it will be only by virtue of the fact that we are cleansed by suffering; that we yearn for the light in the midst of deepest night, summon our strength, and finally help in shaking off the yoke which weighs on our world.

We do not want to discuss here the question of the Jews, nor do we want in this leaflet to compose a defense or apology. No, only by way of example do we want to cite the fact that since the conquest of Poland three hundred thousand Jews have been murdered in this country in the most bestial way.

Here we see the most frightful crime against human dignity, a crime that is unparalleled in the whole of history. For Jews, too, are human beings - no matter what position we take with respect to the Jewish question - and a crime of this dimension has been perpetrated against human beings.

Someone may say that the Jews deserve their fate. This assertion would be a monstrous impertinence; but let us assume that someone said this - what position has he then taken toward the fact that the entire Polish aristocratic youth is being annihilated? (May God grant that this program has not yet fully achieved its aim as yet!)

All male offspring of the houses of the nobility between the ages of fifteen and twenty were transported to concentration camps in Germany and sentenced to forced labor, and all the girls of this age group were sent to Norway, into the bordellos of the SS!

Why tell you these things, since you are fully aware of them - or if not of these, then of other equally grave crimes committed by this frightful sub- humanity? Because here we touch on a problem which involves us deeply and forces us all to take thought.

Why do German people behave so apathetically in the face of all these abominable crimes, crimes so unworthy of the human race? Hardly anyone thinks about that.

It is accepted as fact and put out of mind. The German people slumber on in their dull, stupid sleep and encourage these fascist criminals; they give them the opportunity to carry on their depredations; and of course they do so.

Is this a sign that the Germans are brutalized in their simplest human feelings, that no chord within them cries out at the sight of such deeds, that they have sunk into a fatal consciencelessness from which they will never, never awake?

It seems to be so, and will certainly be so, if the German does not at last start up out of his stupor, if he does not protest wherever and whenever he can against this clique of criminals, if he shows no sympathy for these hundreds of thousands of victims. He must evidence not only sympathy; no, much more: a sense of complicity in guilt.

For through his apathetic behavior he gives these evil men the opportunity to act as they do; he tolerates this "government" which has taken upon itself such an infinitely great burden of guilt; indeed, he himself is to blame for the fact that it came about at all...

Please make as many copies of this leaflet as you can and distribute them.

On 22 February 1943, Scholl, her brother Hans and their friend Christoph Probst were found guilty of treason and condemned to death. They were all beheaded by executioner Johann Reichhart in Munich's Stadelheim Prison only a few hours later, at 17:00 hrs. The execution was supervised by Walter Roemer, the enforcement chief of the Munich district court.

Prison officials, in later describing the scene, emphasized the courage with which she walked to her execution. Her last words were:

"How can we expect righteousness to prevail when there is hardly anyone willing to offer themselves up individually for a righteous cause?

Such a fine, sunny day, and I have to go."

http://jessescrossroadscafe.blogspot.kr/2013/02/on-anniversary-of-death-of-sophie.html

“Seek his will in all that you do, and he will make your paths straight and guide your steps.”
Proverbs 3:6

Prime Minister Abe's Radical Plan for Japan's Constitution

From Jesse's Cafe:

Here is a notice of an upcoming talk at the Foreign Correspondents Club of Japan that I found to be of interest.

I am sure there is some political hyperbole here, and there are also some big 'ifs.'  But this sort of thing does seem to be the general trend amongst the developed nations. 

Democracy was an innovation imposed on Japan in the aftermath of the second World War.  Most westerners do not realize that for the majority of its political life, the postwar government of Japan has been a government dominated by a single party, the LDP in partnership with their corporate combinations, or keiretsus.

And this 'Japan Model' of concentrated political power in a partnership between government and their corporations is responsible for the lack of reform that led to Japan's 'lost decade.'

The Constitution and its integrity takes on an added importance to those devoted to the democractic freedoms and individual protections for this reason.

The Foreign Correspondents Club of Japan
Shinzo Abe's Radical Plan to Change Japan's Constitution

Lawrence Repeta, Professor, Meiji University School of Law
Masako Kamiya, Professor, Gakushuin University Faculty of Law
Yoichi Kitamura, Representative Director, the Japan Civil Liberties Union

12:00-14:00 Thursday, February 21, 2013

Japan's Liberal Democratic Party has made no secret of its plan to comprehensively reform the Constitution, which it says was 'imposed' on the country after World War 2. On April 28, 2012, it revealed what these plans are. The date was chosen to commemorate the sixtieth anniversary of the San Francisco Peace Treaty.

In Diet interpellations on January 30, Prime Minister Shinzo Abe declared that the party would move forward with these plans under his leadership. For many years, debate over constitutional amendment has focused on the war-renouncing Article 9 but the LDP reform plan is far more radical.

If successful, the party would delete Article 97, the Constitution's most powerful declaration of human rights, and make several other far-reaching changes, including elevating maintenance of "public order" over all individual rights; adding a new requirement that citizens "respect" the kimi ga yo hymn and the hinomaru flag; eliminating free speech protection for activities "with the purpose of damaging the public interest or public order, or associating with others for such purposes"; and reducing parliamentary majorities required for constitutional amendments.

If the party achieves these goals, it will create a Constitution that mandates citizen obligations to the state rather than the other way around. This would effectively mean a rejection of popular sovereignty and a return to Japan's prewar order. The LDP and its allies secured more than two-thirds of the House of Representatives in December elections. If they can achieve the same level in the House of Councilors, the door will be open to a new Constitution to match Mr. Abe's vision.

A panel of experts has agreed to come to the FCCJ and explain the significance of these enormously important proposals. Lawrence Repeta is a professor at Meiji University Faculty of Law. Masako Kamiya is a Professor of Law at Gakushuin University and representative director of the Japan Civil Liberties Union. Yoichi Kitamura is a representative director of the same union and a co-counsel in many noteworthy cases, including litigation that led to the historic 2005 Supreme Court decision that found the Diet in violation of the Constitution for failing to adopt adequate voting procedures for Japanese who reside abroad.

Please reserve in advance, 3211-3161 or on the website (still & TV cameras inclusive). The charge for members/non-members is 1,700/2,600 yen, non-members eligible to attend may pay in cash (menu: braised chicken with rosemary and cream sauce). Reservations canceled less than one hour in advance for working press members, and 24 hours for all others, will be charged in full. Reservations and cancellations are not complete without confirmation. For meal service, please enter the room by 12:25.

http://jessescrossroadscafe.blogspot.kr/2013/02/prime-minister-abes-radical-plan-for.html

Emmanuel Saez: Striking it Richer: The Evolution of Top Incomes in the United States

Emmanuel Saez is an economics professor at the University of California at Berkeley

From a Berkeley study:

From 2009 to 2011, average real income per family grew modestly by 1.7% but the gains were very uneven. Top 1% incomes grew by 11.2% while bottom 99% incomes shrunk by 0.4%. Hence, the top 1% captured 121% of the income gains in the first two years of the recovery.

From 2009 to 2010, top 1% grew fast and then stagnated from 2010 to 2011. Bottom 99% stagnated both from 2009 to 2010 and from 2010 to 2011. In 2012, top 1% income will likely surge, due to booming stock-prices, as well as re-timing of income to avoid the higher 2013 top tax rates. Bottom 99% will likely grow much more modestly than top 1% incomes from 2011 to 2012.


This suggests that the Great Recession has only depressed top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s. Indeed, excluding realized capital gains, the top decile income share in 2011 is equal to 46.5%, the highest ever since 1917 when the series start.

http://elsa.berkeley.edu/~saez/saez-UStopincomes-2011.pdf

2012 Export Growth By Country

From the New York Times:

In 2012, United States exports of goods rose 4.5 percent from 2011, a faster rate of growth than that of 10 other major countries but well below the growth rate of Chinese exports. American imports rose 3 percent, but the trade deficit in goods was virtually unchanged. In six of the last seven years, the growth in American exports outpaced that of imports. The United States gained in exports despite declines in trade with some major European trading partners.

http://www.nytimes.com/interactive/2013/02/15/business/US-Trade-in-2012-Outpaced-Many-Other-Countries.html?ref=economy

Global Recession Tugs At US Economy

From Zero Hedge:

This recent release of the manufacturing and industrial production data added further support to our view that the much touted economic recovery has yet to manifest itself.  The latest data showed that manufacturing in January fell back but after strong gains in December and November.  However, it is important to remember that the gains at the end of 2012 were driven by the effects of Hurricane Sandy and the "Fiscal Cliff."  That ramp up in November and December is likely to leave a void in demand in the coming months - so January's weakness is likely a return to a more normalized trend. What is clear, however, is that the economic data is not markedly improving.  While monthly data points will remain volatile it is the trend of the data that is most telling about macroeconomic future.  Currently, that outlook remains one of a "struggle through" environment at best. The belief, currently, is that the economy in the U.S. can decouple from the rest of the globe and act as an island of economic prosperity.  With 40% of corporate profits tied to international exposure it is unlikely that the U.S. can remain decoupled from the rest of the global community for long. 

The chart below shows U.S. industrial production as compared to the Eurozone.  It is clear that the drag from the Eurozone is weighing on domestic output.

http://www.zerohedge.com/news/2013-02-16/guest-post-global-recession-tugs-us-economy

Korean-American Tech Entrepreneur Tapped For Future Creation and Science Minister

From Yonhap:

Kim Jeong-hoon, tapped as the minister for the future creation and science ministry, is an icon of the American dream for South Koreans.

Born in 1960 in Seoul, Kim emigrated to the U.S. from South Korea with his parents at the age of 15. He completed undergraduate degrees in electrical engineering and computer science at Johns Hopkins University and earned his doctorate in three years in engineering from the University of Maryland.

Kim joined Lucent Technologies in 1998 when Lucent acquired Yurie Systems, Inc. for around US$1 billion, a tech equipment firm which he founded in 1992.

He left Lucent in 2002 to join the University of Maryland faculty. But Kim came back to Lucent in April 2005 as chief of the renowned Bell Labs, the research and development subsidiary of the French-owned Alcatel-Lucent.

Park's nomination of the Korean-American businessman underscores her aim to create more jobs by combining scientific and technological developments with industry.

http://english.yonhapnews.co.kr/national/2013/02/17/90/0301000000AEN20130217003000320F.HTML

Five Tools To Protect Your Privacy Online

From Zero Hedge:

We’ve discussed many times before - hardly a month goes by without some major action against Internet users... from Obama’s ‘kill switch’, to ACTA, SOPA and PIPA, to stasi tactics against people like Kim Dotcom.
Online privacy is becoming more important by the day. And nobody is going to give it to you, you have to take steps yourself to secure it.

Below are five different tools and services that will get you started:

1. Tor Browser

Tor is a great weapon in the fight for online anonymity as it allows you to surf the web without giving up your location and other personal data to the websites you visit.
The Tor Browser Bundle is the easiest and most secure way to get started; simply download it, and start surfing the web with the Tor Browser. It’s available for Windows, Mac, and Linux.
Learn more about and download the Tor Browser Bundle here

2. Duck Duck Go

If you want privacy, don’t search with Google.
Google store all of your searches to customize ads for you, but even worse, they can hand over the whole list of searches to any government agency that are curious about what you’ve been looking at for the last couple years.
A better alternative is Duck Duck Go, a completely anonymous search engine that does not store any information about you or your searches. The search results are essentially identical to Google’s, so there’s no loss of quality.
Search with Duck Duck Go here

3. HTTPS Everywhere

HTTPS Everywhere is a plug-in for Firefox and Google Chrome that tries to force a website to connect in secure mode, thus encrypting your traffic with the website you are visiting. This makes your browsing more secure because it prevents eavesdropping thieves or state-mafia from intercepting your unencrypted Internet traffic.
Download HTTPS Everywhere here

4. Cryptocat

Cryptocat is an encrypted chat that beats Facebook and Skype when it comes to security and privacy. If you want to chat in private then this is one simple solution. It’s also open source, which means you can see the full code and be sure there are no government “backdoors” built in.
Read more about and download Cryptocat here

5. Silent Circle

Silent Circle is a new player on the market, but it is founded by “old” players in the security and encryption industry. One of the founders, Phil Zimmerman, is also the creator of PGP, one of the most-used encryption platforms in the world.
Silent Circle is a suite of products offering:

• Encrypted email
• Encrypted video chat
• Encrypted phone calls
• Encrypted text messaging

Silent Circle is the only service on this list that is not free. But having the gold standard of encryption may be worth it for you. It is for me.
Read more about Silent Circle here

You can set up most of the tools we discussed in 5 minutes. Each of them will go a long way in securing your privacy online.

http://www.zerohedge.com/news/2013-02-15/guest-post-five-tools-protect-your-privacy-online

Wal-Mart Says February Sales "Total Disaster", Worst Monthly Start Since 2006; Stock Drops

From Zero Hedge:

Wal-Mart shares are plunging as the firm reports a 'total disaster' in its February sales. Bloomberg obtained internal emails that note:

"In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal-Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company.... That points to our competitive landscape, which means everyone is suffering and probably worse than we are”

Things must not be serious over in Bentonville for this much truth to suddenly hit the tape. One senior executive summed it up perfectly - “Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?” The company notes the end of the payroll tax cut by Obama and asks "We need to stop the stupid."

http://www.zerohedge.com/news/2013-02-15/wal-mart-stock-drops-after-it-says-february-sales-total-disaster-worst-montly-start-

박근혜의 '대기업 때려잡기' 시작됐다

한국일보로부터:

대기업들이 거래 중간에 오너 일가의 지분율이 높은 계열사를 끼워 넣어 중간 마진을 챙기는 이른바 '통행세'를 처벌할 수 있는 근거 규정이 마련된다.

공정거래위원회는 14일 통행세 처벌 규정 신설을 박근혜 정부의 첫 번째 경제민주화 법안으로 설정하고 관련법 개정안을 국회에 제출했다고 밝혔다. 이에 따라 이르면 올해 하반기부터 대기업들의 대표적 계열사 부당지원 관행인 통행세에 제동이 걸릴 전망이다.

공정위 고위 관계자는 "지금까지 대기업 오너 일가의 지분이 많은 계열사가 계약과정 중간에 끼어들어 아무 일도 하지 않고 이득을 챙기는 경우가 많았지만 이를 제재할 수 있는 근거 규정은 없었다"며 "작년 하반기부터 통행세 관행을 막기 위한 제도개선 방안을 논의한 끝에 최근 통행세를 금지하는 조항을 넣은 공정거래법 개정안을 국회에 제출하는 한편, 대통령직인수위원회에도 보고했다"고 밝혔다.

공정위에 따르면 12일 새누리당 김재경 의원의 대표발의로 '독점규제 및 공정거래에 관한 법률 개정안'이 국회에 상정됐으며, 19일 관련 상임위(정무위원회)에서 논의될 예정이다. 이 개정안은 현행 공정거래법 제23조 1항에 '정당한 이유 없이 계열회사 등을 상대방으로 하는 중간거래를 추가하여 계열회사 등을 지원하는 행위를 불공정거래행위로 규제한다'는 조항을 신설한 게 골자다.

이에 따라 대기업 통행세 금지는 새 정부의 첫 번째 경제민주화 법안이 될 가능성이 크다. 현재 국회에는 징벌적 손해배상제 확대를 담은 '하도급거래의 공정화에 관한 법률 개정안'과 가맹본부로부터 가맹점을 보호하기 위한 '가맹사업거래의 공정화에 관한 법률 개정안' 등 경제민주화 관련 법안이 여러 건 상정돼 있으나, 대부분 논란이 여전한 상황이어서 통과가 쉽지 않을 전망이다. 때문에 공정위도 당초 통행세 금지와 집단소송제 강화 등 최근 제기된 경제민주화 이슈들을 함께 묶어 처리하려다, 여야 간 이견이 없는 통행세 처벌 규정 신설을 우선 처리하는 방향으로 가닥을 잡았다.

공정위 고위 관계자는 "통행세 금지는 작년 하반기 주요 추진 과제로 선정돼 연구용역을 의뢰하는 등 검토가 충분히 진행됐고 여론이나 정치권에도 이견이 없는 사안"이라고 설명했다. 김동수 공정거래위원장도 지난해 10월 국정감사에서 "제도적으로 통행세를 막는 것을 적극 검토하고 있다"고 밝힌 바 있다.

김재경 의원 측은 "통행세 처벌 조항 신설에 대해선 정부와 정치권 모두 공감하고 있는 만큼 늦어도 올 상반기 중 법안이 통과될 것"이라며 "통행세 금지는 별도 시행령이 필요 없어 개정안 통과 즉시 효력이 발휘된다"고 설명했다.

http://news.hankooki.com/lpage/economy/201302/h2013021502322521500.htm

"Behold, I make all things new."
Revelation 21:5

IBM Makes Watson, The Medical Computer

From Mish's blog:

Extreme Tech reports IBM makes Watson the size of a pizza box, starts offering cloud access to doctors.

When the robot uprising is finally underway, you might look back on the year 2011 as the beginning of the end. That was the year IBM’s Watson supercomputer trounced its squishy human opponents on the quiz show Jeopardy. Watson is finally being utilized in the real world, and this might be just the beginning.

IBM has entered into an arrangement with Memorial Sloan-Kettering and WellPoint to bring Watson’s expertise to the medical field. Doctors will be able to run the variables through Watson to get suggestions on possible treatments based on giant blocks of medical data.

The Watson-capable servers being deployed to hospitals and data centers will only take up one slot in a standard server rack. Does that mean that it’s slower? Certainly not — Watson’s theoretical processing speed has been bumped up 240% since its television debut.

The key to the slimmed down Watson rig is improved processing algorithms, but also domain specialization. On Jeopardy, Watson had to be able to scan huge amounts of data and spit out an answer in under a second. Health care decisions don’t have to be made instantly — Watson can churn through the medical data for a few seconds before anyone starts getting impatient. The field of study is also much more narrow.

WellPoint points out that doctors miss early stage lung cancer diagnoses about half the time. Watson, on the other hand, is able to get the right diagnosis on these same cases 90% of the time. Although, Watson will still hedge its bets: When a medical professional consults the system, they will receive results on an iPad or computer in about 30 seconds with possible courses of action sorted by confidence level.

If Watson proves to be a success, more consumer-facing applications could be coming down the road. IBM is working with Nuance Communications to develop the system, and Nuance has plenty of consumer products (such as the voice-recognition part of Siri).

So in the not too distant future, you might have a computer to thank for your health. It’s certainly a lot more useful than winning game shows

http://globaleconomicanalysis.blogspot.kr/2013/02/meet-watson-your-doctor-in-pizza-size.html

In response to Meet Watson, Your Doctor in a Pizza-Size Box, reader Robert writes ...

Watson was most likely named for Thomas J. Watson, first president of the modern IBM company, not Sherlock Holmes' sidekick.

It will be interesting to see how Watson makes out.  CAD (Computer Aided Diagnosis) is not new, and has been around for at least 15 years.  2nd read Mammography has been the first area of CAD, but lung cancer has been targeted as well.  Raw computing power is not the issue, algorithms that can differentiate patterns are.

Computers and humans (to date) provide somewhat complementary skills, with computers providing good sensitivity but often poor specificity (high false positive rates) although this area is improving.  We'll see what Watson can do.

I think a more interesting application would be rapid blood chemistry analysis, and DNA analysis (eg. analyzing and categorizing foreign DNA in the blood) which would give much earlier tests for cancer and other disease, even before a patient presents with symptoms and imaging studies are conducted.

Rob

http://globaleconomicanalysis.blogspot.kr/2013/02/reader-reflections-on-watson-medical.html

Global Mobile Phone Sales Post First Decline Since 2009

From Zero Hedge:

One of the fundamental creeds held by the proponents behind every new technology and gizmo market, including cell phones, smart phones, tablets, Sony Walkmen, 8-tracks, VHS tapes, juice extractors, tape rewinders, etc., is that their growth rate (and by implication the consumers' discretionary income), is completely dissociated with gravity and will grow at a far faster pace than global economic growth virtually in perpetuity. This is the case until empirical evidence reminds them, and everyone else, that gravity eventually always wins. Which is precisely what happened with global mobile phone sales, which in 2012 posted their first decline since the cataclysmic 2009. Gartner reports that the global cell phone market declined by 1.7% in 2012, down from 1.78 billion devices sold in 2011 to 1.75 in 2012. "Tough economic conditions, shifting consumer preferences and intense market competition weakened the worldwide mobile phone market this year," the report says.

http://www.zerohedge.com/news/2013-02-13/global-mobile-phone-sales-post-first-decline-2009

Chris Martenson: The Real Reason the Economy Is Broken (and Will Stay That Way)

From Zero Hedge:

We are far enough and deep enough into the most heroic monetary and fiscal efforts ever undertaken to finally ask, why aren't these measures working? Or at least we should be.  Oddly, many in DC, on Wall Street, and the Federal Reserve continue to steadfastly refuse to include anything in their approaches and frameworks other than "more of the same." So we are treated to an endless parade of news items that seek to convince us that a bottom is in and that we've 'turned the corner' – often on the flimsy basis that in the past things have always gotten better by now. Oil is the primary lubricant of economic growth and that it is not just the amount of oil one has to burn but also the quality, or net energy, of the oil that matters. If we want to understand why all of the tried-and-true monetary and fiscal efforts have failed, we have to appreciate the headwinds that are offered by both a condition of too-much-debt and expensive energy.  Neither alone can account for the economic malaise that stalks the world.

http://www.zerohedge.com/news/2013-02-13/real-reason-economy-broken-and-will-stay-way

What Do They Know That We Don’t?

From Testosterone Pit:

Friday evening when no one was supposed to pay attention, Google announced that Executive Chairman Eric Schmidt would sell 3.2 million of his Google shares in 2013, 42% of the 7.6 million shares he owned at the end of last year—after having already sold 1.8 million shares in 2012. But why would he sell 5 million shares, about 53% of his holdings, with Google stock trading near its all-time high?

“Part of his long-term strategy for individual asset diversification and liquidity,” Google mollified us, according to the Wall Street Journal. Soothing words. Nothing but “a routine diversification of assets.”

Routine? He didn’t sell any in 2008 as the market was crashing. He didn’t sell at the bottom in early 2009. And he didn’t sell during the rest of 2009 as Google shares were soaring, nor in 2010, as they continued to soar. In 2011, he eased out of about 300,000 shares, a mere rounding error in his holdings. But in 2012, he opened the valves, and in 2013, he’d open the floodgates. So it’s not “routine.”

Liquidity, Google said. In 2012, he reaped about $1.2 billion from stock sales, and if he can sell this year’s portion at the current price, he’ll reap $2.5 billion. $3.7 billion in total. What exactly would he need that kind of liquidity for? He could buy a Boeing 787, if it ever becomes airworthy again, plus a few castles, dozens of handmade exotic cars.... And it would barely scratch the surface.

Diversification, Google said. Sure, don’t put all your eggs in one basket. Though he didn’t need to diversity from 2008 through 2011, he now needs to diversify urgently. The landscape has changed. And he is reacting to it.

He could diversify into treasuries, for example, which would guarantee him a loss after inflation, thanks to the Fed-imposed financial repression that governs our crazy lives. Or he could buy lots of gold or a myriad of other assets that he thinks make more sense than holding Google stock at the current price.

So, we’re left wondering if there’s something waiting to happen at Google that prescient execs with a phenomenal understanding of the company and the industry can see on the horizon. Google has plowed a lot of money into startups, green energy, and other mind-boggling projects. He might be worried that they won’t pan out, that they’ll have to be cleared off the balance sheet with a huge write-off. He might be worried about a million things.

Yet the fact that he sold practically nothing during the bull market of 2009-2011 suggests that he may see something beyond Google: the hoped for Great Rotation, for example—from those who know to those who don’t. From the Eric Schmidts to mom-and-pop retail investors. And once that’s accomplished....

Small investors lost a bundle in the last crash. At the end of their wits, they got out at the bottom, and stayed out during the subsequent run-up. But now, they’ve been driven to desperation by the Fed’s zero-interest-rate policy, as inflation has hammered their CDs that yield almost nothing. In order to stop losing money slowly but surely, they’re jumping into the stock market once again, buying the very shares Schmidt is selling—or so the smart money hopes—only to face once again the risk of losing a lot of money fast.

That was the Fed’s policy every time. They didn’t care in 2000 that the market demolished a bunch of young upstarts that had gotten unjustifiably and unnecessarily rich. Let them crash. They did it again during the financial crisis. Let them crash. Only when it started taking down their cronies, did they get nervous—and handed them trillions.

Mr. Schmidt isn’t alone. Corporate insiders were “aggressively selling their shares,” reported Mark Hulbert. And they were doing so “at an alarming pace.” The buy sell-to-buy ratio had risen to 9.2-to-1; insiders had sold over 9 times as many shares as they’d bought. They’d been aggressive sellers for weeks. That they dumped shares in December, when the sell-to-buy ratio was 8.38-to-1, could have been the result of the fiscal-cliff theatrics, but the latest sell-to-buy ratio was even worse.

Instantly, soothing voices were heard: “don’t be alarmed,” they said. But Mr. Schmidt and his colleagues at the top of corporate America, multi-billionaires many of them, are immensely well connected, not only to each other but also to the Fed, whose twelve regional Federal Reserve Banks they own and control.

For the mere public, there have been vague and mixed signals that the Fed might finally stop its drunken printing frenzy—that the only thing it is waiting for is the completion of the Great Rotation of equities from the smart money to mom-and-pop money. Once that’s completed, to heck with the markets. But for Mr. Schmidt and his buddies, the signals might not have been vague and mixed, but clear and actionable.

At the other end of the income spectrum: with the average cost of attending college at $120,000, a family of four should expect their children’s college to cost more than a home. Optimism about the value of education provided justification for students to borrow $42 billion from the US this year. Yet many of them will end up as student-loan debt slaves. Read.... College Graduates Are The New Debt Slaves.

http://www.testosteronepit.com/home/2013/2/10/what-do-they-know-that-we-dont.html

N. Korea Claims Successful Nuclear Test

From Yonhap:

North Korea claimed that it successfully conducted its third underground nuclear test at its northeastern site on Tuesday, drawing strong condemnation from the international community, including the governments of South Korea and the United States.

Hours after an unusual seismic tremor was detected at the North's Punggye-ri nuclear test complex, Pyongyang's Korean Central News Agency (KCNA) said that the detonation was of a "high level" using a smaller device compared to its previous two nuclear tests, and that the test was carried out in a safe manner that did not affect the surrounding environment.

"The test was conducted in a safe and perfect way on a high level with the use of a smaller and light A-bomb unlike the previous ones, yet with great explosive power," the KCNA said in the English dispatch, adding that the test did not have any adverse effects on the surrounding environment.

"The specific features of the function and explosive power of the A-bomb and all other measurements fully tallied with the values of the design, physically demonstrating the good performance of the DPRK's (North Korea) nuclear deterrence that has become diversified."

http://english.yonhapnews.co.kr/northkorea/2013/02/12/47/0401000000AEN20130212011900315F.HTML

Show This To Anyone That Believes That "Things Are Getting Better" In America

From Zero Hedge:

The economic collapse is not a single event.  The economic collapse has been happening, it is is happening right now, and it will continue to happen.  Yes, there will be times when our decline will be punctuated by moments of great crisis, but that will be the exception rather than the rule.  A lot of people that write about "the economic collapse" hype it up as if it will be some huge "event" that will happen very rapidly and then once it is all over we will rebuild.  Unfortunately, that is not how the real world works. 

We are living in the greatest debt bubble in the history of the world, and once it completely bursts there will be no going back to how things were before.

As a result of our very foolish short-term thinking, we have now run up a national debt of 16.4 trillion dollars.  It is the largest debt in the history of the world, and it has gotten more than 23 times larger since Jimmy Carter first entered the White House.

The chart that you see below is a recipe for national financial suicide...

Of course things have accelerated over the past four years.  Since Barack Obama entered the White House, the U.S. government has run a budget deficit of well over a trillion dollars every single year, and we have stolen more than 100 million dollars from our children and our grandchildren every single hour of every single day.

It is the biggest theft of all time.  What we are doing to our children and our grandchildren is beyond criminal.

And now our debt is at a level that most economists would consider terminal.  When Barack Obama first entered the White House, the U.S. debt to GDP ratio was under 70 percent.  Today, it is up to 103 percent.

We are officially in "the danger zone".

If things really were "getting better" in America, we would not need to borrow so much money.

Our politicians are stealing from the future in order to make the present look better.  During Obama's first term, the federal government accumulated more debt than it did under the first 42 U.S presidents combined.

At the same time that we are going into so much debt, our ability to produce wealth continues to decline.

According to the World Bank, U.S. GDP accounted for 31.8 percent of all global economic activity in 2001.  That number dropped to 21.6 percent in 2011.  That is not just a decline - that is a nightmarish freefall.  Just check out the chart in this article.

We are becoming less competitive as a nation with each passing year.  In fact, the U.S. has fallen in the global economic competitiveness rankings compiled by the World Economic Forum for four years in a row.

Most Americans don't understand this, but the United States buys far more from the rest of the world than they buy from us each year.  In 2012, we had a trade deficit of more than 500 billion dollars with the rest of the world.

Well, to make up the shortfall we go to the countries that we sent our money to and we beg them to lend it back to us.  If that doesn't work, we just print and borrow even more money.

Overall, the United States has run a trade deficit of more than 8 trillion dollars with the rest of the world since 1975.

Every single dollar that you own is continually losing value...

Overall, the value of the U.S. dollar has declined by more than 96 percent since the Federal Reserve was first created.

As the cost of living continues to go up and wages continue to go down, millions of American families have fallen out of the middle class and into poverty.

If you can believe it, the number of Americans on food stamps has grown from about 17 million in the year 2000 to more than 47 million today.

Incredibly, more than a million public school students in the United States are homeless.  This is the first time that has ever happened in our history.

http://www.zerohedge.com/news/2013-02-11/guest-post-show-anyone-believes-things-are-getting-better-america

Venezuela Launches First Nuke In Currency Wars, Devalues Currency By 46%; Venezuelan Devaluation Sparks Panic

From Zero Hedge:

While the rest of the developed world is scrambling here and there, politely prodding its central bankers to destroy their relative currencies, all the while naming said devaluation assorted names, "quantitative easing" being the most popular, here comes Venezuela and shows the banana republics of the developed world what lobbing a nuclear bomb into a currency war knife fight looks like:

• VENEZUELA DEVALUES FROM 4.30 TO 6.30 BOLIVARS
• VENEZUELA NEW CURRENCY BODY TO MANAGE DOLLAR INFLOWS
• CARACAS CONSUMER PRICES ROSE 3.3% IN JAN.

And that, ladies and gents of Caracas, is how you just lost 46% of your purchasing power, unless of course your fiat was in gold and silver, which just jumped by about 46%. And, in case there is confusion, this is in process, and coming soon to every "developed world" banana republic near you.

http://www.zerohedge.com/news/2013-02-08/venezuela-devalues-its-currency-32

From The Financial Times:

Panic buyers thronged Venezuelan shops over the carnival weekend after the government of Hugo Chávez announced a surprise devaluation that analysts said was overdue but would only partly right the listing economy.

But while the government gains, most Venezuelans lose out, with Ecoanalitica estimating an 8 per cent fall in consumers’ purchasing power. Until the government next decrees an increase in minimum wages, the relative value of workers’ salaries will fall.

“Those most affected, apart from consumers, are the multinational companies that couldn’t repatriate capital, and they will end up losing from one day to the next 46.5 per cent of their funds accumulated in bolívars,” said Mr Oliveros.

Shares in companies with Venezuelan operations, including Colgate-Palmolive and Avon, fell on the announcement.

Mr Oliveros added that the devaluation was also likely to spur inflation, which at more than 20 per cent is one of the highest in the world, since more than a third of the goods consumed by Venezuelans are imported, while around half of locally produced goods rely on imports for their production.

http://www.ft.com/intl/cms/s/0/12e9f32e-739e-11e2-9e92-00144feabdc0.html#axzz2KXzI60UD

Modern Market Alchemy Explained: Converting Junk Debt Into Supersafe Treasuries Out Of Thin Air

From Zero Hedge:

When it comes to the actual functioning of capital markets, there is always much confusion within the made for TV punditry for one simple reason: the number of people who truly understand collateral transformation courtesy of the shadow banking system, which until recently was a massive $23 trillion off the books repository of everything the banks did not want you to know about, can be counted on one hand. That certainly would explain the existence of such media trolls as "conscientious" NYT columnists, and various three letter "modern" theories explaining how money would work in a world if only all practical reality was removed.

And while we have previously explained extensively how it is that what actually happens behind the scenes is so very different from what most believe is market reality, especially with our three+ years series on shadow banking, confusion is still rampant. Which is why we hope an extract from Fed Governor Jeremy Stein's speech titled "Overheating in Credit Markets: Origins, Measurement, and Policy Responses", will finally make it sufficiently clear that when it comes to shadow banking collateral transformations, modern day alchemy does in fact work, and one can transmogrify junk bonds into Treasurys with the wave of a magic (yield) wand.

From Fed's Stein: "The insurance company might approach a broker-dealer and engage in what is effectively a two-way repo transaction, whereby it gives the dealer its junk bonds as collateral, borrows the Treasury securities, and agrees to unwind the transaction at some point in the future. Now the insurance company can go ahead and pledge the borrowed Treasury securities as collateral for its derivatives trade."

Thanks to the magic of FAS 140 banks can literally transform worthless garbage into supersafe Treasurys, then use that newly transformed collateral via further repo as cash to fund simple stock purchases, and at the end of the day nobody knows where the exposure came from, who the counterparty is, and what the ultimate liability is!

And that is why in the current market, the Fed has no choice but to keep the music going, because while an unwind of traditional liabilities will result in a maximum collapse of some $13 trillion in conventional financial liabilities, it is the $15-20 trillion in shadow banking exposure which nobody knows about except for the banks themselves (we hope), and which allows banks and hedge funds to literally create purchasing power out of thin air, that once the house of out of control deleveraging cards starts falling, it is truly game over.

http://www.zerohedge.com/news/2013-02-07/moden-market-alchemy-explained-converting-junk-debt-supersafe-treasurys-out-thin-air

전원책: “‘박근혜 공약’ 이행 위한 채권발행 논의 차세대에 엄청난 부담인데 걱정스럽다”

주간경향으로부터:

“박근혜 후보가 될 겁니다.”

12월 18일에는 각종 여론조사에서 문재인 후보가 역전했다는 자료가 돌았고, 정치평론가들이나 베테랑 정치부 기자조차 “이번엔 정말 모르겠어요. 박빙이에요”라고 말을 흐리고, 심지어 용하다는 점쟁이들도 문 후보가 다음 대통령이 될 운명이라고 했다는 소문이 무성했다. 전 원장은 더욱 단호한 목소리로 말했다.

“아마 100만~150만표 정도 차이로 이길 걸요. 투표율이 아무리 높아도 그 정도 차이일 겁니다.”

결국 박근혜 후보가 이겼다. 108만표 차이였다. 이런 족집게 도사가 있나.

선거 결과를 거의 정확히 예측했다면 다음 정부의 스타일도 예측할 수 있지 않을까. 서울 여의도 자유경제원 사무실에서 만난 그에게 5분 간격으로 각종 방송사의 출연과 코멘트 요청, 칼럼과 강의 문의 전화가 걸려 왔다. 그 가운데서도 그는 흐트러지지 않고 인터뷰에 응했다.

정치평론가로서 이번 선거를 어떻게 평가하나.
“최악의 선거였다. 문민정부 이후에 5번의 선거에서 최소한 각 당 후보의 기본적 정책 차이를 보여줬다. 이번 선거에선 정책은 다 비슷비슷하고, 그나마 제대로 알리지도 않고 대중 기호와 인기에 영합한 포퓰리즘에만 치중했다. 적어도 과거 후보들은 국민들에게 차별화한 정책을 설명하고 ‘현재는 어렵지만 조금만 고통을 참으면 미래가 밝아온다’며 인내와 헌신을 요구했다. 그런데 이번 선거는 중간에 포기한 안철수 전 후보마저 이미지와 이벤트에만 치중했다. 정책 알리기-정책과 후보 검증-토론 등의 순거가 아니라 그저 다 해주겠다, 다 퍼주겠다 등 대중 기호와 인기에 영합하는 말만 늘어놓다가 곧장 네거티브로 들어갔고 토론조차 엉뚱한 방향으로 흘러갔다.”

초박빙이었는데 박의 승리를 예견한 근거는 무엇인가.
“이번 여론조사의 경우 응답률이 10% 미만으로 너무 낮아 의미가 있지 않았다. 다만 박근혜와 안철수의 대결이라면 지지층이 세대 대결로 가지만 박과 문의 구도라면 우파와 좌파의 대결이 될 것으로 봤다. 보수와 진보의 대결이라면 몰라도 좌와 우의 대결에선 항상 우파가 승리한다. 진보를 자처하는 이들도 ‘좌파냐?’고 물으면 펄쩍 뛴다. 첫 토론 후 이정희씨의 태도와 마지막 토론에서 국정원 여직원을 문 후보가 ‘피의자’ 운운하는 것 덕분(?)에 시큰둥하던 5060층이 결집했다. 변화를 요구하는 20~30대는 정작 유약해서 적극 투표를 하지 않고 험란한 세상을 이겨온 이들은 또 자신의 삶이 흔들리고 싶지 않아 ‘초박빙’ ‘판세가 뒤집혔다’는 소문에 투표장으로 달려갈 것으로 분석했다.”

안철수씨로 단일화했다면 결과가 달라졌을까.
“그렇지 않다. 안철수씨가 주장한 ‘새정치’는 그저 구호일 뿐이다. 새정치는 과거 후보들이 다 외쳤던 단골 용어다. 김영삼 대통령은 군부 종식을 외치며 하나회를 척결했다. 김대중 대통령은 새정치국민회의를 만들 만큼 새정치에 대한 강한 신념을 보였다. 노무현 대통령이야말로 가장 새정치를 실현한 인물이다. 상향식 민주주의와 기간당원제도를 주장했지만 우리 민도가 낮아 실현되지 못했다. 이명박 대통령조차도 기존 여의도식 낡은 패거리 정치를 혐오하지 않았나. 안철수씨는 정치판의 부패와 무능률을 비판하며 국회의원 수를 줄이자는 주장을 했다. 대통령 제도의 폐단은 권력 남용이다. 그것을 막고 견제하는 것이 국회의 임무이자 기능이다. 국회의원 수를 줄일 것이 아니라 국회를 1년 내내 열어 예결산 심의를 수시로 하고 상시 감사를 하면 된다. 대통령의 사면권 남용은 대법원이 한마디 하면 되고, 낙하산 인사는 청문회에서 철저히 검증하면 된다. 그런데 사면권은 재야 법조인들이 ‘재벌 가석방은 안 된다’고 떠들 뿐이고 청문회는 망신회로 끝나는 수준이다. 그런데 국회의원 수를 줄이는 것을 새정치의 기치로 내거는 것은 그가 정치를 잘 모른다는 증거다.”

안철수씨는 정치를 계속한다는데.
“정치인 안철수의 효용은 끝났다고 본다. 그의 정치관이 모호하고, 그에게 모였던 기라성 같은 명사들도 정책과 신념으로 모인 이들이 아니기 때문이다. 안철수란 브랜드의 대중적 인기를 업고 자기 꿈을 펼치려는 패거리 정치꾼과 무엇이 다른가. 안철수씨는 로스 페로와 닮았다. 컴퓨터 기업으로 명성과 부를 얻은 다음 그걸 발판으로 정치쇄신이라는 명분 하나만으로 생소한 정치판에 뛰어든 배짱까지 둘은 붕어빵이다. 다만 페로는 자기 신념에 투철해 포기하지 않았으며 끝까지 완주해 자신을 지지하는 대중에게 그 책임을 다했다. 그리고 당연히 정치무대에서 사라졌다. 대통령 출마가 마지막 정치행위가 되어야 패거리 정치가 나타나지 않는다는 원칙에 그는 충실했다. 안철수씨는 당분간만이라도 완벽하게 정치무대에서 퇴장해야 한다.”

박 당선인의 정책을 보면 향후 우리 정부의 미래가 밝아 보이는가.
“너무 걱정스럽다. 솔직히 줄푸세 등 과거 공약은 물론 이번 대선에서의 공약을 이행하려면 22조원의 새로운 자금이 필요하다고 한다. ‘약속의 정치인’을 이마에 붙이고 다니는 분이니 새로 예산을 짜자, 채권을 발행하자 등의 논의가 벌써부터 정가를 술렁이게 한다. 채권 발행은 곧 국가채무이고, 균형재정이 무너질 수도 있다. 현재 대한민국 부채가 국가부채, 공기업부채, 지자체부채 등을 합쳐 대략 1800조원 규모다. 채권 발행은 무엇보다 차기 정부나 차세대에게 엄청난 부담인데 걱정스럽다.”

http://newsmaker.khan.co.kr/khnm.html?mode=view&code=113&artid=201212311347441&pt=nv

French Socialist Nightmare: 'The State Cannot Do Everything'

From Testosterone Pit:

The preannouncement came Thursday evening: PSA Peugeot Citroën, France’s largest automaker, would have a write-down of €4.7 billion. On top of a hefty operating loss. It would be colossal. An all-time record. Rumors spread immediately that PSA would need a bailout. The second in four months.

PSA passenger car sales in France dropped nearly 17% in 2012 from an already awful 2011. In January they dropped another 16.7%. Sales for all automakers dropped 15%, and PSA’s market share had eroded further. Kia-Hyundai sales jumped 21.2%, the only major automaker with gains. Even Volkswagen Group got clobbered: down 23.9%. PSA isn’t internationally diversified enough. It doesn’t have much in China and nothing in the US, the largest markets in the world, both growing. It’s mired in Europe where auto sales have ground to a halt. It’s bleeding €200 million a month. It’s trying to lay off 8,000 workers and shutter its plant in Aulnay-sous-Bois. And its Banque PSA Finance was bailed out last October with €7 billion in taxpayer money.

The government was so worried that it was actively studying a bailout, sources told the Liberation after the losses were announced. It was just hypothetical. “But if a capital infusion would become inevitable, the state could participate,” the source said. Instantly, a cacophony of discord erupted—within the Socialist government.

Another chapter in the saga of the deindustrialization of France—a process that has afflicted France, like other developed nations, for decades as manufacturing has wandered off to cheaper countries. But now there’s a near national consensus: the state needs to step in and stop it, according to a poll that CSA conducted for Les Echos and the Institut Montaigne....

The same Institut Montaigne that had shocked the establishment last April with a new French Paradox: employees in France were more dissatisfied with their jobs and more stressed at work than their counterparts in the rest of Europe—despite highly protective, “dense and complex” labor laws that allowed the French to work fewer hours, work less often over the weekend, and have a “less sustained pace of work.” And it dared to wonder if the sacrosanct labor laws were still protective, or if they’d become counterproductive even for employees. Gasps all around.

Deindustrialization has been on the front burner since the presidential campaign last year. But now, in the poll, it came down to a single question: Is the decline in manufacturing a phenomenon that can be reversed? The resounding response spread across all professional levels, all ages, and the entire political spectrum—78% of the respondents said yes.

The French expect the government to do “the maximum” to prevent plant closures, explained Jérôme Sainte-Marie, director of CSA’s political opinion division—something that those on the extreme right and left had been clamoring for all along. Now they “find themselves comforted” by the survey results, he said. And it puts the government in a quandary.

So far, it has shied away from nationalizing troubled plants. A risky path: the phrase by Lionel Jospin that “the state cannot do everything” was “absolutely impossible to maintain,” Sainte-Marie said. “Public opinion doesn’t want to hear it.”

He was referring to a Socialists nightmare. Jospin, Socialist Prime Minister from 1997 to 2002, had admitted that he could not prevent layoffs at a Michelin factory, that the state couldn’t do everything (“l’État ne peut pas tout”). A phrase—or a concept, rather—according to some political soothsayers, that contributed to his humiliating defeat in the 2002 presidential election. He was trounced in the first round by right-wing Jean-Marie Le Pen, which forced the left to vote for Jacques Chirac in the second round just to keep the unpalatable Le Pen out. An unforgettable horror story still for the Socialists.

For a Socialist government to admit again that the state couldn’t do everything, that some layoffs and plant closures would be allowed, was fraught with perils. During the presidential campaign, they’d promised the “reindustrialization” of France, and “the French took them by their word,” said Sainte-Marie.

So what to do about PSA?

“This company cannot, must not disappear,” said Budget Minister Jérôme Cahuzac Friday morning during an interview. “We have to do what we have to do so that it survives.” He’d already worked out the details: the bailout money would come from the state-owned Strategic Investment Fund (FSI).

Minutes later, Finance Minister Pierre Moscovici disagreed: “Jerome Cahuzac talked about a theoretical scenario and the tools available to the state,” he said. But “such a state bailout is not being considered, is not necessary, and would not add anything.” Sources in his entourage agreed, “A capital infusion by the state is not on the agenda.”

By midday, Prime Minister Jean-Marc Ayrault jumped into the fray. A bailout was not “on the agenda,” he echoed. PSA hadn’t requested it. Though there was “a tool, the FSI,” that could do it. But “this question hasn’t been raised today. Therefore, there is no question.” But if necessary, he grumbled, PSA would have to “be saved at all costs.”

And so continues the saga of the decline of the private sector à la Française. Tuesday morning, the 168 employees of automotive component maker DMI in Vaux, a tiny town near Montluçon in the Department of Allier, smack-dab in the middle of France, rigged about ten gas cylinders throughout the factory they’d been occupying and threatened to blow it up—unless their demands were met. Read.... French Workers Threaten To Blow Up Their Factory.

http://www.testosteronepit.com/home/2013/2/8/french-socialist-nightmare-the-state-cannot-do-everything.html

Weekend Reading: The Touchstone of Faith Is Love

From Jesse's Cafe:

For all the people of God, this is the touchstone, to know if what we believe is with Him, or with something else, if we are walking with Him, or with something else, if the one who speaks is speaking for Him, or for something else.

Love cannot be counterfeit for any duration, but always shows itself to be genuine or not. It does not speak with hate or anger or fear, but with a fullness of existence that can only be approximated by that which is opposed to His existence.

When you are in doubt or confusion, look for the love, and if it is not there, if it is hardness of pride disguised as 'love,' then you know what it is.  Pride says that this one deserves their misfortune, as I do not, for whatever reason, as if they know God's will.

Love is not easy, and is not a natural state, seeming weak and despicable to the fallen, but rather is a conscious disposition of the mind and the heart. It is a habit of acting and looking at things, that becomes easier and more comfortable as we carry that yoke on the weaker nature of our emotions, which over time becomes light, and a light.

This is how the people of God may judge themselves and their own actions along the way. If there is no love evident in the words and the heart, then the speaker and their words are not of God, but of something else.

Love is not what we do, but how we do what we do.  Love is found in the most practical things, not in grand gestures and sacrifices, but in the small daily acts, done lovingly, with care.

We do not need to hate and reject the world, and despise His creation, because they are a gift to us from God, to which we bring our use and order. We must work with them lovingly, and not with abuse from self-absorption and greed. It is not the world that is a source of evil, but the willfulness of our hearts, hardened with pride.

God is the essence of all existence, which is love.

"If I speak in the tongues of mortals and of angels, but do not have love, I am a noisy gong or a clanging cymbal. And if I have prophetic powers, and understand all mysteries and all knowledge, and if I have all faith, so as to remove mountains, but do not have love, I am nothing. If I give away all my possessions, and if I hand over my body so that I may boast, but do not have love, I gain nothing.

Love is patient; love is kind; love is not envious or boastful or arrogant or rude. It does not insist on its own way; it is not irritable or resentful; it does not rejoice in wrongdoing, but rejoices in the truth. It bears all things, believes all things, hopes all things, endures all things.

Love never ends. But as for prophecies, they will come to an end; as for tongues, they will cease; as for knowledge, it will come to an end. For we know only in part, and we prophesy only in part; but when the fullness comes, the partial will come to an end.

When I was a child, I spoke like a child, I thought like a child, I reasoned like a child; when I became an adult, I put an end to childish ways. For now we see in a mirror, dimly, but then we will see face to face. Now I know only in part; then I will know fully, even as I have been fully known. And now faith, hope, and love abide, these three; and the greatest of these is love."

“You shall love the Lord your God with all your heart and with all your soul and with all your strength and with all your mind, and your neighbor as yourself.”

http://jessescrossroadscafe.blogspot.kr/2013/02/weekend-reading-touchstone-of-faith-is.html