My friend and respected newsletter-economist John Mauldin is one of the smart-sane ones and he has a lot of cogent things to say. He often zeroes in on mistakes being made by the other side, in ways that might actually lead to direct improvement, were the process of deliberation and negotiation still in play. He makes the kind of suggestions that the minority party ought to be making, in order to fix and improve political measures, instead of leaving them to pass without conservative input and hoping they will fail.
(Side note: My guess is that more GOP office holders would be “Responsible Republicans” if they thought they could get away with being seen actually engaging in deliberation and negotiation with the commie/nazi/satanic liberals, without being punished by the current owners of their party -- Rush Limbaugh, Rupert Murdoch and the Saudi Royal House.
(In fact, my best guess is that some RRs will emerge from hiding, as soon as primary season is over, when they no longer have to fear a Fox-propelled populist insurgency from the far-right. Of the kind the only yesterday deposed Senator Bennett from the GOP nomination for re-election from Utah. The survivors may get some backbone in mid-summer... especially if Republican poll numbers start to slip. We already see signs of negotiation over finance reform that was anathema during the Health care debate.)
But back to John M. Let me reprint a passage of his you should ponder:
It now looks like almost 30% of the Greek financing will come from the IMF, rather than just a small portion. And since 40% of the IMF is funded by US taxpayers, and that debt will be JUNIOR to current bond holders (if the rumors are true) I can't tell you how outraged that makes me. What that means is that US (and Canadian and British, etc.) tax payers will be giving money to Greece who will use a lot of it to roll over old bonds, letting European banks and funds reduce their exposure to Greece while taxpayers all over the world who fund the IMF assume that risk. And does anyone really think that Greece will pay that debt back? IMF debt should be senior and no bank should be allowed to roll over debt and reduce their exposure to Greek debt on the back of foreign taxpayers.
Dang but that’s smart and on-target... and wholly based on commen sense, rather than reflex left rightism.
One of 10,000 things that I hate most about Culture War is that guys like this are marginalized to fret on the sidelines, without anyroute for their voices to be heard in high places. It’s not the fault of the “other side.”
It is the fault of a movement that has gone mad, manipulated into an orgy of dullard hatefulness, instead of putting guys like John up front. Grownups who would negotiate hard... but negotiate like adults.
=== WISDOM FROM THE EAST ===
Michael Nash, the film-maker who created the new documentary “Climate Refugees,” has offered a fascinating insight into what’s at stake in the current American climate-ideology wars. While his main emphasis is focused on the millions of refugees who already are on the move, because of changing water and food conditions... (three million leaving Burma, 300,000 who never went home to New Orleans)... he also had an insight that starkly portrays the insipid self-destruction that is inherent in our current Culture War over this issue:
”An interesting conversation took place one night while we were at COP15. Producer Justin Hogan and I were having drinks with a couple of guys from China. We started talking about America and how America looks at climate change. I asked them what they thought about America, and what they told me stopped me in my tracks.
“They said, “The left wants to save the world, and the right thinks it’s all about money. The right thinks America’s economy isn’t strong enough to move from an oil-based energy system to an alternative-based.”
“They then went on: “The right is correct – it’s all about money – but they could not be more incorrect in their interpretation of the money.”
“I asked “What do you mean?” They continued: “Make no mistake about it, the world is going green. Nothing would make people like us in China happier than America continuing this debate for the next 10 or 15 years. Because in 15 years, when you guys come out of the fog, China will own the revenue stream of the green revolution. We’ve spent a hundred years trying to catch up with the United States, and we now have the opportunity to blow past you in a half generation.””
Wow. That really turns your head, reminding you that the "defenders" of free enterprise have been its worst enemies.
I have stressed relentlessly that most of the measures that would help alleviate Anthropo generated Global Warming (AGW) happen also to be essential for achieving US energy independence, increased economic efficiency, and a competitive edge in the most important technologies of the next generation.
On that basis alone, the neocon Koolaid in this issue is tantamount to treason, and that makes it small surprise that Rupert Murdoch’s chief investors and business partners include some of the top Russian and Gulf State petro princes and oligarchs, using some of the same consultants and strategies that worked for Big Tobacco, a generation ago.
15 comments:
Science News:
The Gulf drilling platform explosion, and the failure of the containment dome, were both due to release of methane clathrates.
If there are enough clathrates down and out there to the extent that they can actually cause physical damage to drilling equipment, can you imagine the amount that just quietly and routinely bubbles off? THIS IS REALLY, REALLY, REALLY bad news for the viability of offshore drilling.
Of course, the enthralled Drill Baby Drill crowd won't give a damn.
I Miss Republicans
1. Actually the IMF raises money on the bond markets using its capital base. So it's actually the international bond market not US taxpayers financing the lending.
2. "And does anyone really think that Greece will pay that debt back?"
There is absolutely no rational basis for assuming the loans WON'T be repaid.
Greece actually has quite a good track record on repaying past debts and any default by a Eurozone member would be so catastrophic for all members that if it were a serious prospect they'd bail it out.
The Eurozone economy is substantially larger than the US economy and the likely deficiency on any Greek default is simply tiny in comparison.
I have to agree with Ian. Yes, Greece will pay that debt back... but they are going to go through hell to do it. Europe's uneven development and vastly different levels of efficiency are going to become standardized through the grinding processes of Brussels.
European integration has gone too far to be easily undone; the attempt would make even more of a mess. The UK might be able to detach if it got the gumption to do it -- they threw in cavils and caveats at every stage, prepping against that possibility -- but the debtors of the Continent (Greece, Italy, Spain, and Portugal being worst) are going to feel the influence of the North strongly in the coming months and maybe years. It won't be pleasant, but the alternative is to see Europe's recovery collapse and the Great Recession go into a second phase. (Ireland is also a big debtor, but unlike the other four, it doesn't have systemic diseases... it just expanded too fast and got bubbled. Ireland has housing enough for the next thirty years, for instance.)
@Brin re:Ian: ok, so the principal is 40% America's, but the bonds are international. So we are senior on the IMF bonds (as the biggest investor)... but the loans made with the money raised by the bonds is junior to previous bondholders. Is that an accurate summary?
Re: greentech: I think one thing that's wrong here is that the right persists in thinking of greentech as a luxury. Since it was in high demand long before the tech was mature, initially only the rich could afford it (as with all new techs). So it was thought of as fashionable... but not really a serious basis for large scale work. Both political and economic pressures to integrate green more fully are thus ignored:
* political because "it's a luxury fad" -- with a conspiracy behind it to extend the four-decade "fad" past its due date --
* economic because you *never* use a luxury tech as part of your vital tech base: it's less dependable and someone will undercut you with the cheaper sources of power, tooling, etc.
Both these arguments work well at their true purpose: to wish away the externalities recognized by the whole rest of the planet that make greentech, though still capital-intensive, a necessity rather than a luxury. It is also a short-horizon view that ignores the hard numbers of the next century:
1) While the population will grow by only 50% this century, the demands for goods and services in both energy and matter will grow by a factor of four (due to rising affluence).
2) There is no way to increase goods and services, matter and energy delivery by a factor of four without imposing costs due to environmental problems that outweigh the profits of delivering those goods and services.
3) Therefore, long term profitability absolutely demands increased efficiency, productivity, and environmental improvement and/or mitigation.
It's that simple, even if quantization of long-term risks and benefits gets you into devil-in-the-details problems.
"@Brin re:Ian: ok, so the principal is 40% America's, but the bonds are international. So we are senior on the IMF bonds (as the biggest investor)... but the loans made with the money raised by the bonds is junior to previous bondholders. Is that an accurate summary?"
Pretty much.
The money will probably come under the New Agreement to Borrow, which authorises the IMF to borrow against it's gold reserves and member deposits.
The IMF will be providing a standby facility which will be drawn up if and when the loans from the other Eurozone members have been fully drawn.
IF that standby facility is fully drawn and IF Greece immediately defaults without paying anything back and doesn't work out a rescheduling AND the IMF can't refinance the debt it took on AND can't offset the losses against profits on its other operations AND doesn't simply revalue some of its gold reserves (still on the books at $20 an ounce)to market value to absorb the losses then in theory US taxpayers could eventually be out of pocket by $40 billion, assuming that the US agrees to a new subscription to recapitalise the IMF.
Did I mention that "the US taxpayer" hasn't put a cent into the IMF since (IIRC) 1992?
My guess is that more GOP office holders would be “Responsible Republicans” if they thought they could get away with being seen actually engaging in deliberation and negotiation with the commie/nazi/satanic liberals, without being punished by the current owners of their party -- Rush Limbaugh, Rupert Murdoch and the Saudi Royal House.
But it appears that they can't; even Sarah Palin is in trouble right now, for endorsing Carly Fiorina, who is merely extremely right-wing, and not an actual Nazi, and thus insufficiently crazy for 'the base'.
What's happening to US politics at the moment is really quite amazing.
Ireland is also a big debtor, but unlike the other four, it doesn't have systemic diseases... it just expanded too fast and got bubbled. Ireland has housing enough for the next thirty years, for instance.
I wouldn't say that, exactly; we just have different problems, in many ways more similar to the UK's than those of the other PIIGS countries. We have an extremely high level of home ownership and personal debt, we have unsustainably low taxes (even still, after a number of emergency budgets), and too much of our economy is based on rather nebulous things like finance.
It's beginning to look, incidentally, like we may have housing FOREVER; the population has already gone down dramatically, as immigrants from other EU states leave, and this is expected to continue for a while (the economists have been saying lately that GDP rise over the next couple of quarters won't be sufficient to create significant new jobs, but unemployment will drop because everyone's leaving...)
29 years ago, Reagan ordered the solar panels on the White House removed, presumably because Carter had them installed. How much do you suppose that has cost the taxpayers over the years?
"mingot", spawn of Ming.
Of course, there is another side to that: early solar paneling had a problem where if a panel was holed, the entire panel stopped working. If sections of the solar array on the White House stopped working, then it would have been cheaper to take it all down rather than continually replace solar panels.
I'm not saying that this is what was happening... but it's a possibility.
Rob H.
I'm somewhat tired of the "the taxpayer will pay for Greece" meme.
The debt of the EU countries is owned by banks and such, that in turn sold it to savers who got interest from those bonds.
I don't see said taxpayers happy at all if the shockwave of a systemic failure sweeps the whole Euro finance, and the real economy behind it. As we say in Italy, it looks a lot like the cuckold husband who... ah, surgically removed his reproductive glands with a sharp cutting implement to punish the cheating wife.
If memory serves, they weren't photovoltaic. I think they just preheated water to reduce energy costs, one of the little things to nibble away at energy problems.
Another point about Greece: the previous bonds may initially have been sold to Eurozone banks but banks no longer simply sit passively on such debt instruments. They unitize them; on-sell them; use them as the underlying collateral on capital guaranteed products and rewrap them with a negative floater and a dual collar.
So US banks and US private equity investors are probably already heavily exposed to any Greek default.
Thoughts on Greece: I am worried about them, not so much because they will or won't pay it off but that the IMF, largely funded by us, will have to foot the bill. In other words, since no big financial group ever pays for anything if they can avoid it, WE will foot the bill. We can't afford that. And yes, the most recent news I've heard is that the IMF will contribute 30%. Any liberal worth his salt will be worried about this. EVERY conservative should be. If they aren't they are either ignorant, foolish, greedy or all three. (The last is very likely for the Shrub cabal.)
Thoughts on global warning wrt China. I've never seen anything that has ever made me believe that China should never have gotten Most Favored Nation status. It should be revoked forthwith. We'll better be able to pressure them and be better off in the long run despite any economic harm it may do us in the short term. We should be all for scientifically based green industries and push them like crazy, using U.S. companies to push this. It's a great way to help us, the world and compete against China who do see themselves in a long-term economic war with the U.S. and "the West." Making a deal with them in any way is really being in bed with the Devil since every deal will be for their advantage and our long-term disadvantage - well, to put it a little less harshly - every one else's long term secondary status compared to China. There is a better way to deal with them, turn them towards a more democratic government and also towards truly working with others rather than for our disadvantage but the U.S.'s current economic set up is NOT that way.
C'mon, criticize me.
Dang - wish this had an edit mode.
Of course I mean we should never have given China MFN status.
gmknobl:
again, financial systemic failure worldwide _AND_ a trade war with China (which il turn still own a huge humongous lot of $ and US T-Bonds?
while we're at it,what next, a plague of locusts, a dinosaur-killer steroid and the Yellowstone supervolcano exploding?
next...
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