Honestly, sites about technology (and its uses, regulations, and how the government & society view it) and economics (and its uses, regulations, and how the government & society view it) seem to be more factual, objective, well-written, and cover a broader range of topics in the news than 99% of the publications supposedly dedicated to “news”.
No idea if I’ll have the mental stamina to keep publishing these little two- or three-day summaries, but that’s the goal I’m setting myself for right now.
Interesting stories (or interesting to me at least) from March 5 & March 6 stories on The Register:
Australian government report recommends creation of a new central committee to handle all complaints about the media in Australia. It suggests bloggers be considered under the jurisdiction of the new government committee if they get 41 hits a day or more. The story says reactions in Australia are “vivid and varied.” I’m sure they are.
The next time you look at someone in IT & think “man, they get paid to do nothing but sit around on their butt all day”, remember this story. Sysadmin Trevor Pott tries to port some 1-800 numbers from an older phone system to a newer one, and winds up in what he describes (accurately, I think) as “telco hell”, with his company’s 1-800 numbers being unusable from sometime early on a Thursday to the next Monday, and being told the problem resides with companies which — as far as he knew when he started the process — didn’t have a darn thing to do with him porting numbers from one provider to another. The story occurs in Canada & relates to phone numbers, but probably anyone in IT (or anyone who knows someone who’s worked in IT) can relate.
Hehehehe . . “A Lithuanian court has ruled that the brewing of Carlsberg lager is a “vitally essential” activity, thereby depriving the Danish beer monolith’s workers the right to strike.” Click on the link for the full article.
Wow. British government tries same employee assessment tactic as U.S. corporations (and will probably meet with same dislike & poor results). It’s an iPad app for British Prime Minister David Cameron that will provide a real-time assessment based of whether ministers should be fired based on “hard empirical data”. Such “objective data” usually does not indicate anything about whether the person is easy to work with, difficult, a troublemaker in the office, ethical, proactive, able to work without constant supervision, or any of the other 1001 things that people see when they deal with that employee.
Experienced tech-aware readers will spot the flaw in the concept. Computers aren’t intelligent, they merely embody the prejudices and agendas of the humans who write the code. There is no such thing as “an objective set of criteria”, since the criteria will be set by whoever is advising the coders. It may be decided that a minister who has failed to tweet in sufficient volumes is not sufficiently “engaged”, and so deserves despatching to the shark tank.
And another “Wow”. DISH Network wants to do same thing as LightSquared tried, buy U.S. spectrum designated for satellite broadcasts, say “maybe those satellite broadcasts might need an occasional ground tower to help users” and then flip that into “hey, let’s just create an entire higher-broadcast-power ground system in that frequency range.” LightSquared got turned down the FCC after GPS developers & users (including GPS receiver manufacturers, agricultural equipment manufacturers, civil aviation authorities, and the U.S. military) all testified the yes, LightSquared’s system did interfere with GPS receivers. According to the article on The Register, there’s even talk of opening most of the entire low-power satellite band to higher-powered ground systems, which might or might not be a good idea on how it’s implemented but why isn’t this being covered in regular news?? A quick internet search only turned up specialty space/satellite news sites discussing the issue, and some financial sites discussing DISH Network buying up parts of a couple of old companies to get the spectra.
Five (alleged) members of Anonymous subgroup LulzSec are arrested after a top member of LulzSec became a witness for the prosecution after pleading guilty to a number of criminal charges in August 2011.
U.S. congressman Darrell Issa of the U.S. House of Representatives publishes the full text of ACTA (Anti-Counterfeiting Trade Agreement), which has been portrayed as being SOPA/PIPA’s international bigger & meaner brother. Personal confession: I haven’t read the ACTA text yet myself, so can’t say with confidence how true that characterization it. (Here is link to ACTA text.) U.S. negotiations on ACTA started under President George W. Bush and have continued under President Obama. The current presidential administrations says ACTA isn’t anything the House or Senate needs to look at, even though in 2002 then-Senator & now-Vice-President Joe Biden sent a letter to then-President Bush regarding the need for congressional oversight into overseas agreements.
Due to some legal fine print, the agreement isn’t under review by elected officials in the US, whose government refuses to classify ACTA as a formal treaty, and insists that as such it doesn’t have to go before Congress for ratification.
Interesting (to me) stories from March 5 & March 6 on ZeroHedge:
Lombard Street On Computer Models Versus Looking At The Facts. Excellent article about inability of credit cycles in the economy and inherent weaknesses of computer models.
In 1974, Hyman Minsky explained the unfolding of credit cycles with his Financial Instability Hypothesis. It identifies three types of debt financing: hedge (borrowers can pay principal and interest from income, so risk is minimal); speculative (borrowers can pay interest from income, but need liquid financial markets to refinance the principal at maturity, so defaults rise when liquidity is impaired); and Ponzi (borrowers can’t pay either interest or principal out of income, so need the price of the asset to rise to service their debts and defaults soar when asset prices stop rising). Confidence rises over a prolonged period of prosperity, so a capitalist economy moves from hedge finance dominating its financial structure to increasing domination by speculative and Ponzi finance.
Financial markets and the economy are relatively stable when hedge financing dominates, but become ever more unstable as the proportions of speculative and Ponzi finance rise.
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models assume a universe populated with rational people who are acquainted with all the relevant facts and act accordingly. No such people exist or ever have existed. Desires and fears, i.e. emotions, drive all human activity. They are neither rational nor linear, so can’t be modelled. However, they do fluctuate within given parameters most of the time, so the resulting behaviours can be modelled as long as the emotions stay neatly within the parameters and historical relationships continue. This is a big ask and gives rise to another three problems that bedevil model predictions. First, extreme events pop up far more frequently than mathematical theory predicts. Second, models can’t predict when an extreme event will occur. Third, they can’t give any reliable information on an extreme event – even after it has occurred – so the models still can’t incorporate the effects on economies and financial markets of the reversal from the ever increasing leverage of the past to the present deleverage.
Emotions exceeding known parameters cause extreme events, such as stock market booms and busts. They are self-reinforcing spirals upward and especially downward that, once established, keep diverging from equilibrium until the driving forces fade or stronger counter forces reverse them.
Guest Post: Enjoy the Central Bank Party While It Lasts. Long post, pretty interesting, somewhat pessimistic, a little bit optimistic at the end. Countries & central banks are all trying to devalue their currencies to devalue the overly-large debts they all ran up. Overly large debts are a recurring problem in democracies as citizens realize they can vote for government to give them (or try to give them) what they can’t afford themselves. Some interesting comments on how that might likely play out in the U.S. as various existing government programs don’t always serve all racial, ethnic, class, and age groups the same, so cutting any policy produces charges of favoritism from someone.
Couple Lives In $1.3 Million, 4,900 Square Foot Home For Five Years Without Making A Single Mortgage Payment. Not so good at paying their mortgage, but they’re very very good at using every delaying tactic they can find to keep from being evicted.
Dallas Fed’s Fisher “Perplexed” By Wall Street “Fetish” With QE3 And Disgusted With The Addiction To “Monetary Morphine” Speech from member of Dallas Fed to Dallas Regional Chamber of Commerce on March 5. ZeroHedge slams the speech since the member of the Fed is perplexed by Wall Street’s constant begging for more bailouts & quantitative easing, when it is the Fed itself that created that addiction by providing the money and the political cover for much of the previous bailouts. But the member of the Dallas Fed (not sure exactly who it is) makes a lot of good points. The speech also has a link to a really good YouTube video about current U.S. debt & debt limit, www.youtube.com/watch?v=Li0no7O9zmE
More than $1.5 trillion in excess reserves sit on deposit at the 12 Federal Reserve banks, including the Dallas Fed, for which we pay private banks a measly 25 basis points in interest. A copious amount is being harbored by nondepository financial institutions, and another $2 trillion is sitting in the cash coffers of nonfinancial businesses.
Trillions of dollars are lying fallow, not being employed in the real economy. Yet financial market operators keep looking and hoping for more. Why? I think it may be because they have become hooked on the monetary morphine we provided . . .
. . .
I am well aware of the salutary effect of accommodative monetary policy on the equity and fixed-income markets . . . Counting on the Fed to perpetually float returns is a mug’s game.
. . . I believe adding to the accommodative doses we have applied rather than beginning to wean the patient might be the equivalent of medical malpractice. Having never before pursued this course of healing, we run the risk of painting ourselves further into a corner from which we do not know the costs of exiting. It is my opinion that we should run that risk only in the most dire of circumstances, and I presently do not see those circumstances obtaining.
. . .
Thus, even if one were to somehow have 100 percent certainty about the future course of Federal Reserve policy and be completely comfortable with it, without greater clarity about the future course of fiscal and regulatory policy and whether that policy will be competitive in a globalized world, job-creating investment in the U.S. will remain restrained and our great economic potential will remain unrealized.
I pull no punches here: We have been thrown way off course by congresses populated by generations of Democrats and Republicans who failed the nation by not budgeting ways to cover the costs of their munificent spending with adequate revenue streams. The thrust of the political debate is now—and must continue to be—how to right the listing fiscal ship and put it back on a course that encourages job formation and gets the economy steaming again toward ever-greater prosperity. No amount of monetary accommodation can substitute for the need for responsible hands to take ahold of the fiscal helm. Indeed, if we at the Fed were to abandon our wits and seek to do so by inflating away the debts and unfunded liabilities of Congress, we would only become accomplices to scuttling the economy.
I was in Mexico last week. Mexico has many problems, not the least of which is declining oil production, low school graduation rates and drug-induced violence. But on the fiscal front, the country is outperforming the United States. Mexico’s government has developed and implemented better macroeconomic policy than has the U.S. government.
Mexico’s economy contracted sharply during the global downturn, with real gross domestic product (GDP) plummeting 6.2 percent in 2009. But growth roared back, up 5.5 percent in 2010 and 3.9 percent in 2011, with output reaching its prerecession peak after 12 quarters—three quarters sooner than in the U.S. Mexico’s industrial production passed its prerecession peak at the end of 2010; ours has yet to do so.
Now hold on to your seats: Mexico actually has a federal budget! We haven’t had one for almost three years. Furthermore, the Mexican Congress has imposed a balanced-budget rule and the discipline to go with it, so that even with the deviation from balance allowed under emergencies, Mexico ran a budget deficit of only 2.5 percent in 2011, compared with 8.7 percent in the U.S. Mexico’s national debt totals 27 percent of GDP; in the U.S., the debt-to-GDP ratio computed on a comparable basis was 99 percent in 2011 and is projected to be 106 percent in 2012. Imagine that: The country that many Americans look down upon and consider “undeveloped” is now more fiscally responsible and is growing faster than the United States. What does that say about the fiscal rectitude of the U.S. Congress?
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You asked me to talk about the economy. In a nutshell, my answer is this: Monetary policy provides the fuel for the economic engine that is the United States. We have filled the gas tank and then some. And yet businesses will not use that fuel to a degree necessary to realize our job-creating potential and create a better world for the successor generation of Americans until Congress, working with the executive branch, does the responsible thing and pulls together a tax, spending and regulatory program that will induce businesses to step on the accelerator and engage the transmission mechanism of job creation so they and the consumers they create through employment can drive our economy forward.
Hugely long but very interesting guest post from Jim Quinn of The Burning Platform regarding whether U.S. households are actually getting rid of debt (“deleveraging”). His conclusion: absolutely not. Another depressing post (ZeroHedge is not a happy-go-lucky place), but a lot of interesting statistics. A few that caught my eye:
A two decade increase in retail sales of 135% might seem reasonable and normal if wages and household income had grown at an equal or greater rate. But total wages only grew by 125% over this same time frame.
. . .
The 135% increase in retail sales over two decades may have been slightly enhanced by the 213% increase in consumer credit outstanding.
. . .
The Big Lie of austerity and consumer deleveraging is unquestioned by the talking heads in the mainstream media. They are incapable or unwilling to examine the actual data which substantiates the fact that Americans have NOT deleveraged and have NOT taken austerity to heart. The most basic facts fly in the face of consumers even having the wherewithal to pay down their debt. Median household income has declined from $50,300 in 2008 to $49,400 today. There are 5 million less people employed today than employed in 2008.
. . .
Household debt as a percentage of wages in 2008 was 185%. Today, after the banks have written off $1.2 trillion of debt, this figure stands at 169%.
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The fact that 40% of all 20 to 24 year olds in the country are not employed and 26% of all 25 to 34 year olds in the country are not working may also play a role in holding back spending, as jobs are somewhat helpful in generating money to buy stuff.
Europe, which is such a mess it gets a little subsection all to itself: The Greek bailout/default is still going to places both expected & unexpected. Articles from ZeroHedge & other places around the web over the last few months (years?) have generally been of the consensus that:
- Greece has more debt than it can ever pay back.
- It likely will have to leave the Eurozone (the area that uses the Euro as currency), but not sure if it will have to leave the European Union completely.
- There was never really any contingency plans built into the European Union or Euro monetary union that dealt with a member country leaving either of those once it was a member.
- There’s a lot of wealth — on paper and in digital memories, not necessarily in the real world — tied up in those debts. As Reggie Middleton has pointed out numerous times in his articles, one’s man debt is another man’s asset. So, when that Greek debt can’t be paid off, someone’s going to take a big hit.
- Most of the bailout money going to Greece is being used to pay Greece’s bondholders. So, is the bailout money really going to Greek citizens — or to buyers of Greek bonds?
- Greece is not the only one with problems. And the other countries with problems are too big to be bailed out. And no one wants to recognize this, so a lot of the things being done just cover symptoms & push the problem into next week or next month or next year, they don’t actually solve any underlying problems.
Furthermore, recent actions by the Greek government & European Central Bank have severely damaged a lot of the trust needed for any market to actually work (in this case, bond markets).
- Greece decided to retro-actively add “Collective Action Clauses” which state that if a certain percentage of bond-holders agree to a change in bond payment terms (delaying of payments, reduction of bond interest rate, reduction of bond principal itself), then all bond-holders get affected by that change. So that contract you signed after you thought you read all the fine print — the fine print & even regular size print can change without you agreeing to it if enough other people who also signed that contract agree to the change.
- Because of the risk involved with holding Greek bonds, a lot (actual number unknown, which is a whole other contentious topic) of bond holders have hedging agreements in place, which are basically insurance policies. Although these insurance policies against default (usually called CDS, fro credit default swap) each have their own contracts, the generic contract is overseen by the ISDA (International Swaps & Derivative Association). The ISDA declares if it considers something to be a credit event that — in their opinion — should or shouldn’t trigger CDS contracts. And the ISDA has already decided that a 70+% writedown on Greek bonds is not a default. Which means that no one is really sure what would be considered a default, and now even less people are going to be willing to buy government debt from troubled countries because CDS contracts that were supposed to be insurance policies against default are themselves too unreliable to be trusted.
- In addition to all that, the European Central Bank, which has accepted a lot of Greek bonds as collateral for its loans of money to Greece, has declared that the bonds they hold don’t get written down. Period.
So, essentially, if you’re a private citizen, or even a private entity like a hedge fund or small-ish bank, the lessonis don’t buy European government debt because contract law has been suspended and the terms of contracts can be changed without any warning.
Anyway, stories on ZeroHedge from March 5 & 6 about all this: