tag:blogger.com,1999:blog-8587336.post2173132595428239630..comments2024-03-28T23:39:08.616-07:00Comments on CONTRARY BRIN: Corn, Ethanol, Farms, Food and the Logic of the GranaryDavid Brinhttp://www.blogger.com/profile/14465315130418506525noreply@blogger.comBlogger66125tag:blogger.com,1999:blog-8587336.post-42668152317060279202013-03-22T11:27:53.919-07:002013-03-22T11:27:53.919-07:00"Source for those numbers?"
having been...<br />"Source for those numbers?"<br /><br />having been a professional economist, having followed in detail multiple other currency crisis.<br /><br />Hence the qualifier "I think".Ianhttps://www.blogger.com/profile/01739671401151990700noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-44224653509515405932013-03-22T11:25:15.069-07:002013-03-22T11:25:15.069-07:00"Are you saying we should throw out the notio..."Are you saying we should throw out the notion of sovereign deposit insurance?'<br /><br />No, I'm saying that in this instance the sovereign insurer would also be bankrupt with a significant deficiency.Ianhttps://www.blogger.com/profile/01739671401151990700noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-40792143253702161582013-03-22T10:06:30.610-07:002013-03-22T10:06:30.610-07:002. Without an immediate cash injection, Cyprus'...<i>2. Without an immediate cash injection, Cyprus' banks will go bankrupt. If this happens the average depositor will lose far more than the maximum 10% imposed in the levy.</i><br /><br /><b>Why? The average depositor has an account fully insured by a sovereign government, the entire purpose of which is to protect ordinary people against bank bankruptcy. Are you saying we should throw out the notion of sovereign deposit insurance?</b><br /><br />There are two issues, here. First, there is the matter of the "average" depositor. I recall reading that something close to one-half of all deposits in Cyprus's banks are in accounts above the EUR 100K guarantee level. I don't know the breakdown by bank, but I suspect that those accounts are overrepresented at Laiki and Bank of Cyprus, which are the two most troubled banks. What this means is that, even given insurance, the <i>average</i> loss could be very large, and indeed much more than 10%.<br /><br />Second is the matter of "sovereign deposit insurance" when the <i>sovereign</i> is also bust. Remember that the larger issue here is the question of providing loans to Cyprus so that they can keep paying their bills.gregory byshenkhttps://www.blogger.com/profile/08565517478782844083noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-41654940001015616482013-03-22T09:36:40.779-07:002013-03-22T09:36:40.779-07:00"2. Without an immediate cash injection, Cypr..."2. Without an immediate cash injection, Cyprus' banks will go bankrupt. If this happens the average depositor will lose far more than the maximum 10% imposed in the levy."<br /><br />Why? The average depositor has an account fully insured by a sovereign government, the entire purpose of which is to protect ordinary people against bank bankruptcy. Are you saying we should throw out the notion fo sovereign deposit insurance?<br /><br />"You'll see the EU backpedaling so fast they'll invade Canada by accident."<br /><br />I don't know, I get the impression the bigger obstacle is Cyprus trying to protect its cushy status as a tax haven.<br /><br />"Cyprus would, I think, notice the 50-80% fall in wages and GDP that would ensue. "<br /><br />Source for those numbers?<br /><br />Yglesias suggests that Cyprus/EU sell recognition of Turkish Northern Cyprus for the $5-10 billion needed.Damien Sullivanhttps://www.blogger.com/profile/13321329197063620556noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-25804481738095232412013-03-22T08:14:14.717-07:002013-03-22T08:14:14.717-07:00Ian: That's my point. There is currently no pr...Ian: That's my point. There is currently no process for quitting or being tossed out of the Euro. So if Cyprus is forced out of the Eurozone? There is precedent. There is a groundwork that has been laid. And having tossed Cyprus... wouldn't it be so much easier to just toss Greece out next? Oh hey, and look at Italy, it's causing troubles so let's toss them... and Spain. You just eliminated all those trouble-maker economies... but what about France? It's not doing so well... where do you stop?<br /><br />Precedent in this case could result in the Eurozone falling apart. Because if a nation is removed because it's doing poorly... then other nations can be removed as well. And no nation wants to join an organization where you're tossed out when you're a pauper.<br /><br />Rob H.Acacia H.https://www.blogger.com/profile/07678539067303911329noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-34145472659247728442013-03-22T05:14:19.049-07:002013-03-22T05:14:19.049-07:00Ian,
Re: Iceland.
Their choice isn't currency ...Ian,<br />Re: Iceland.<br />Their choice isn't currency devaluation or everything's okay. It's wgae/price devaluation by currency devaluation or by in-currency deflation.<br /><br />One of these is greatly preferable to the other.<br /><br />And yes, I remember when the Aussie bought US50c. Now imagine that from wage/price deflation alone, with the AUD/US still fixed. (And the current return to USD parity by wage/price inflation alone.)<br /><br />Of course, that wouldn't happen. Even with a "fixed" dollar, the government would have altered the exchange rate before they let things get that bad. Not enough, of course, but it would have softened the blow.<br /><br />No Euro nation can alter their "exchange rate". So unlike Iceland, they will suffer through slow internal deflation and a suppressed economy until internal prices "normalise". [Then further suppressed until they recover from the cost of recovery.)<br /><br />Re: Cyprus.<br />"One time tax"? I doubt that. This was another Euro band-aid.Paul451https://www.blogger.com/profile/12119086761190994938noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-21538936686342007952013-03-21T22:59:11.081-07:002013-03-21T22:59:11.081-07:00This is the source for Cyprus' primary deficit...This is the source for Cyprus' primary deficit: http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=121.GST.A.CY.N.B1300.PDF.B0000.CU.E<br /><br />Of course that BEFORE the entire banking system collapses taking most of the private sector with it.Ianhttps://www.blogger.com/profile/01739671401151990700noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-80330712143871381402013-03-21T22:57:47.956-07:002013-03-21T22:57:47.956-07:00Cyprus runs a primary deficit (i.e. excluding inte...Cyprus runs a primary deficit (i.e. excluding interest on its public debt) of E700 million a year - or around E700/US$1,000 per person.<br /><br />If Cyprus defaults on its debts and lets its banks go bankrupt, then taxes on every working Cypriot are going to have to go up by at least that much per year.<br /><br />Anyone thinks that's a preferable option to a one-time tax that'll cost most Cypriots (as opposed to Mafiya bosses) a couple of hundred Euroes/Ianhttps://www.blogger.com/profile/01739671401151990700noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-42153393599700802442013-03-21T22:21:21.328-07:002013-03-21T22:21:21.328-07:00"Because if you can be tossed out because oth..."Because if you can be tossed out because other governments don't like what you're doing... why join? "<br /><br />There is no mechanism for countries ot be "tossed out' o the euro.<br /><br />for that matter there's no mechanism for a country to voluntarily leave the Euro.<br /><br />I'm astonished by the number of peopel who think that hyperinflation and a currency crash - the sort of thign that Weimar Germany went through in the 1920's and Zimbabwe went through in the last decade - is some magical panacea.Ianhttps://www.blogger.com/profile/01739671401151990700noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-59065671006691320672013-03-21T21:48:34.194-07:002013-03-21T21:48:34.194-07:00Ian, should ANY nation, no matter how small, leave...Ian, should ANY nation, no matter how small, leave the Euro... it sets a bad precedent. Suddenly it's no longer such an attractive deal. Because if you can be tossed out because other governments don't like what you're doing... why join? You're forced to obey the majority rule (or more specifically <i>Germany's</i> rule) and lose significant sovereignty. <br /><br />If you (as a nation) keep your own currency then you're not forced to follow rules that you disagree with. In all likelihood that nation would be able to get free trade status anyway. <br /><br />Rob H.Acacia H.https://www.blogger.com/profile/07678539067303911329noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-20749357416925598992013-03-21T21:41:43.839-07:002013-03-21T21:41:43.839-07:00"Iceland's currency fell in value against..."Iceland's currency fell in value against other currencies. Surely you can see the difference between that and in-currency deflation as is required throughout the Euro periphery?"<br /><br />Paul, Iceland is around the population of the Northern Territory (Americans, think Wyoming).<br /><br />There's virtually no secondary industry of any sort and precious little primary industry other than fishing.<br /><br />Virtually everything people buy has to be deported. so yes, the 30% devaluation (a pick-up from the early 60% devaluation) has had a massive impact on living standards.<br /><br />Remember when the Aussie dollar fell below 50 US cents, multiply that a few times over.Ianhttps://www.blogger.com/profile/01739671401151990700noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-44030310284430727062013-03-21T19:08:17.699-07:002013-03-21T19:08:17.699-07:00Ian,
Re: Iceland's "30% wage cut"
I...Ian,<br />Re: Iceland's "30% wage cut"<br /><br />Iceland's currency fell in value against other currencies. Surely you can see the difference between that and in-currency deflation as is required throughout the Euro periphery?<br /><br />[And yes, Krugman detailed, repeatedly, the effect of the Iceland default.]<br /><br />Re: Germany being "sick of blame"<br />Then they should stop being arseholes. The recession is not a morality play about the noble German versus the lazy Latin.<br /><br />Seriously, they milked an property boom in the periphery, ignored EU debt policy, then whined like spoiled brats when the bubble burst and they are asked to pay out to save the Euro.<br /><br />This is what happens in common currencies. During recessions, money flows from low-unemployment areas to high-unemployment areas.Paul451https://www.blogger.com/profile/12119086761190994938noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-42868900790439355652013-03-21T18:44:19.653-07:002013-03-21T18:44:19.653-07:00"And feel free to toss us out of the Eurozone..."And feel free to toss us out of the Eurozone... and see how long the Euro lasts after that."<br /><br />The Eurozone wouldn't even notice Cyprus' departure.<br /><br />Cyprus would, I think, notice the 50-80% fall in wages and GDP that would ensue.Ianhttps://www.blogger.com/profile/01739671401151990700noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-69849827833383731552013-03-21T18:37:38.817-07:002013-03-21T18:37:38.817-07:00As for the myth of the painless default:
If you s...As for the myth of the painless default:<br /><br />If you stop repaying your debts people will stop lending to you.<br /><br />If you're a government and you run a deficit and people stop lending to you, you immediately have to either raise taxes or cut spending enough to run a surplus or print money.<br /><br />The economic impact of Greece or Cyprus doing that would be far, far worse than what they've endured to date.<br /><br />But keep looking for that magic pot of leprechaun gold.Ianhttps://www.blogger.com/profile/01739671401151990700noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-47170363691646248232013-03-21T18:36:24.762-07:002013-03-21T18:36:24.762-07:00My understanding is "The Cypriot haircut"... My understanding is "The Cypriot haircut" is more of a creature of the ECB, and I'd expect it to surface in other countries as well.Tim H.noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-78624056250005704152013-03-21T18:33:05.186-07:002013-03-21T18:33:05.186-07:00Yes, because Cypriots really need to see their wag...Yes, because Cypriots really need to see their wages cut 30% like Icelanders.<br /><br />What, Paul Krugman didn't mention that?<br /><br />Did he mention that within a year the ban on moving capital out of Iceland expires and they'll likely be facing a whole new economic crisis?Ianhttps://www.blogger.com/profile/01739671401151990700noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-17741015607894236102013-03-21T18:08:24.259-07:002013-03-21T18:08:24.259-07:00I say Cyprus should take a page from Iceland's...I say Cyprus should take a page from Iceland's book and let the banks default... and pay what they are legally meant to under the bank insurance funds. They should tell the other nations "we're sorry, but since you're telling us we have to pony up for your screw up with Greece? We're not playing your game anymore. And feel free to toss us out of the Eurozone... and see how long the Euro lasts after that."<br /><br />You'll see the EU backpedaling so fast they'll invade Canada by accident.<br /><br />Rob H.Acacia H.https://www.blogger.com/profile/07678539067303911329noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-89412397775019348612013-03-21T16:42:10.082-07:002013-03-21T16:42:10.082-07:001. Cypriot banks are bankrupt because Greece defau...1. Cypriot banks are bankrupt because Greece defaulted on its government bonds and forced a 50% writedown in the value of the debt. At the time, the same people decrying the bank tax were applauding this as a vicoryfor the common man over the greedy fat cat bankers.<br /><br />2. Without an immediate cash injection, Cyprus' banks will go bankrupt. If this happens the average depositor will lose far more than the maximum 10% imposed in the levy.<br /><br />3. The levy is being revised but in its original form, accounts with less than 100,000 Euroes in them were going ot be taxes at 6%. (This is now being revised to 3% on balances over E20,000.) 50% of Cypriots have less than E1,000 in the bank - meaning they'd be facing a maximum tax of E60. Another 40% have less than E10,000 meaning they were facing a maximum tax of E600.<br /><br />4. The money has to come from somewhere. When Greece in similar circumstances cut government spending and raised taxes it was likened to the Nazi invasion of Greece, the Sack of Rome and described as a crime against humanity.<br /><br />5. Oddly enough, those damn selfish Germans are getting tied of being called Nazi scum while simultaneously being ordered to fork over 10 of billions of Euroes.Ianhttps://www.blogger.com/profile/01739671401151990700noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-55294895088556962082013-03-21T15:58:03.158-07:002013-03-21T15:58:03.158-07:00Robert, I'm in a union, and your proposal soun...Robert, I'm in a union, and your proposal sounds intriguing. There are three caveats I'd like to invoke:<br />1. Tie executive bonuses and golden parachutes to the same index. Ya don't get the megapayout if you run the company into the ground, then split.<br />2. Have a fallback if the company runs into a problem that makes them unprofitable for a while. Our union was offered a choice of layoffs or a 5% pay cut for everyone. We took the 5% cut.<br />3. What about the unions for nonprofits and government workers? They still need at least COLA/inflation raises, despite the fact that all the 'profits' are used inside the 'business'.<br /><br />TheMadLibrarian<br />linkgro: I couldn't have picked a more apropos captcha...TheMadLibrariannoreply@blogger.comtag:blogger.com,1999:blog-8587336.post-75537387171795972962013-03-21T14:04:50.123-07:002013-03-21T14:04:50.123-07:00What I don't understand, or maybe I should, si...What I don't understand, or maybe I should, since Govt is involved, is why anyone in their right mind would use corn to produce ethanol. One, it's a food source, nuff said, and 2, it robs the soil of more nutrients than any other crop, requires more fertilizer, and requires specific weather. 40 years ago they knew they could produce fuel from hybrid poplar, and it doesn't coat your motor with an almost impossible to remove syrup. And it didn't need to be mixed with petroleum fuel for use. Drawback? Engines don't carbon up, could run forever. but the lost jobs could be made up producing that fuel, and we wouldn't be dependent on other countries whims, we could be self sufficient. Oh, excuse me, what was I thinking, it makes sense!<br />See http://www.motherearthnews.com/renewable-energy/hybrid-poplars-zmaz80jazraw.aspx?page=2#axzz2KbeyxNA0tchofclashttps://www.blogger.com/profile/14600978785134152277noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-53020217363162707322013-03-21T08:48:20.447-07:002013-03-21T08:48:20.447-07:00Holy crap, check out Cyprus.
Situation as I under...Holy crap, check out Cyprus.<br /><br />Situation as I understand it:<br />1. Russian oligarchs deposit lots of mony in banks in Cyprus<br />2. Cyprus banks have to invest it, so they put it all in Greek government bonds.<br />3. Greece does what it does.<br />4. Cyprus needs a bailout to pay back the oligarchs, but the EU doesn't like russian oligarchs, so they say cyprus has to do a lot of the bailing.<br />5. Cyprus is little. They can't do much.<br />6. <b>They decide to take some money from all the bank accounts in cyprus, including the little guys, to balance the books.</b><br /><br />I couldn't have written a boondoggle like this if I'd tried. Cyrpri delenda est.sociotardhttps://www.blogger.com/profile/11697154298087412934noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-69228812520665520842013-03-21T06:03:50.950-07:002013-03-21T06:03:50.950-07:00Looking at an article in the March 2013 issue of &...Looking at an article in the March 2013 issue of "Contemporary Accounting Research" about management efforts to fail to meet analysts predictions so to have a position of strength with collective bargaining agreements, I have to wonder: has any labor union ever offered a tiered contract where each year raises are based on the profitability of the company? In short, if profits don't rise to X level, no raises. If profits are from X to Y, then the contract stipulates AB level of raises. If profits are from Y to Z, then the contract stipulates BC levels of raises.<br /><br />In short, this allows management to have a fallback position in that if profits aren't increasing and the company is doing poorly, then they won't be hit by the whammy of a labor contract that assumed higher level profits. But if the company DOES do better then the union isn't screwed because they accepted no raises due to the poor level of company profits... only to have the company take off and ignore its workers.<br /><br />Rob H.Acacia H.https://www.blogger.com/profile/07678539067303911329noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-56022703175722503522013-03-20T11:04:38.831-07:002013-03-20T11:04:38.831-07:00sigh. oh for an edit function.
I messed up the P&...sigh. oh for an edit function.<br /><br />I messed up the P>>T thing. When T>>P you have the potential for a Malthusian situation. If no innovation occurs then T is infinite. If innovation relies on genetics, the T is dependent on the rate at which new animals are born and how long it takes them to mature.<br /><br />Obviously I'm over-simplifying things mathematically. Populaton size in the absense of innovation isn't sinusoidal. I'm just playing with functions to point out the limits on the analysis Malthus provides.Alfred Differhttps://www.blogger.com/profile/01170159981105973192noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-57713731610778885492013-03-20T10:58:17.488-07:002013-03-20T10:58:17.488-07:00Malthus was himself guilty of projecting trends in...Malthus was himself guilty of projecting trends into the future, though I'm far more inclined to be moved by his than the blind optimists or pessimists. His trends were backed by a lot more supporting evidence.<br /><br />The problem with Malthus, though, is that humans are animals who innovate. We do things like invent languages to help us communicate in our efforts to coordinate. We invent trade outside our family groups. Show me an animal that does that. We invent trade tokens like money, checks, and credit cards. We invent methods for farming our food instead of hunting and gathering it. We invent methods for harnessing coal, oil, uranium, and sand to extract old, stored energy and difficult to use sunlight to do what our muscles cannot. Did slavery end because we became more aware of the immorality of the institution or did it end because fossil fuels out-competed the slaves? <br /><br />We also innovate small like lids that fit on any sized drink cups in fast food restaraunts, no-signature-needed small credit transactions at authorized POS sites, and tolerance of right turns on red lights at some US intersections.<br /><br />Some innovations are slow, but some are blindingly fast. From a biological perspective, the only life forms that match our speed are the bacteria and viral parasites and we are working at getting faster than them too. The problem with invoking Malthus is that his analysis applies to slower innovation. Boom and bust cycles are a good description when the period of the cycle P is much shorter than the time constant T of the exponential function used to approximate the power innovation brings us. If P>>T we have what Malthus described for animal population cycles. <br /><br />When P~T it is a different story. An optimist effectively believes that P is near or below T whether they say it that way or not. A singulatarian would probably argue the P<T while thinking they have proof. I'm skeptical of statements of proof, but I'm not skeptical that P ~ T since the dawn of the industrial revolution and maybe a little before it.<br /><br />y(t) = exp(t/T) * sin(2pi*t/P)<br /><br />Play with the curve awhile and you'll see Malthus and non-Malthus behaviors. Obviously, only an optimist would use an exponential function instead of another sinusoidal one, but we have a lot of useful evidence regarding our population numbers that Malthus didn't have. We've been growing in numbers for millenia and growing faster with each economic revolution. Innovation matters a lot.Alfred Differhttps://www.blogger.com/profile/01170159981105973192noreply@blogger.comtag:blogger.com,1999:blog-8587336.post-7069535933271494882013-03-20T10:14:43.604-07:002013-03-20T10:14:43.604-07:00Anonymous said:
The USA has plenty of areas suitab...Anonymous said:<br /><i>The USA has plenty of areas suitable for long term storage of grain without need of expensive climate control. Properly stored, grain can be kept for a decade. If at the end of that decade the grain isn't needed, or if sooner there is another bumper crop, then they could convert to alcohol.</i><br /><br />That is exactly what I was thinking. I don't know what made Egypt so ideal to store grain (low humidity?), but there are places in the American southwest that are very Egypt-like. In fact, the US government already owns a _ton_ of that land, which it uses for all sorts of random things, like huge bombing ranges.<br /><br />And the American southwest is not that far from the American midwest via train.<br /><br />And if they can store grain for years without any climate control at all, surely we can come up with something to reduce the humidity _even more_ and store it longer. I mean, there's plenty of solar panels there, and we know how to make air-tight buildings...let's get on this.<br /><br />Meanwhile, while we're talking about places that don't need climate control...what's the stuff we could freeze and have last a long time? Because, you know, we have a part of this country that is below freezing all year round...<br /><br /><br />Unrelated, DB talked about the scam of selling off our reserves when the prices were low. This is probably why we need some sort of automatic controls on those things, entirely outside the hands of the government. Have them only able to sell if the price gets to a certain amount, tied to inflation.<br /><br />Frankly, with the Republican deliberately wrecking up the place every time they come in, we need a _lot more_ shit that just works regardless of what they do.DavidTCnoreply@blogger.com