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Renewals

by DoDo Sun Dec 21st, 2014 at 11:00:51 AM EST

In this first train blog in a long time, I bring two disparate stories only connected by the theme of renewal and their closeness to me.

First, after more than two decades, there is a change at the helm of international trains between Prague and Budapest. Both the old and the new loco type was noteworthy for matching or exceeding the performance of contemporary Western products.

Czech Railways (ČD) 380 020 with an EC train to Budapest runs along the Danube on its last kilometres in Slovakia

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Oil Prices Drop as Market Collapses

by ARGeezer Mon Dec 15th, 2014 at 01:51:18 AM EST

Will the Oil Collapse Kill Energy Junk Bonds?  (Yves Smith on Illari's post from Automatic Earth)

(The PBS News Hour Friday, December 12, noted that US oil prices dropped below $60/bbl Friday, causing the lagest drop in US stock markets in three years.)

Some context, (via Ed Harrison):

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Leaving the Euro

by rz Sun Nov 30th, 2014 at 03:50:15 PM EST

I wrote a quite long comment in  Migerus Diary and I thought I should extend it even more and make a diary out of it.

In the comment section melo started a discussion about the Euro, in this case Germany leaving the Euro.

I posed the question to all participation in this thread

Would you recommend leaving the Euro? And: Would you vote for a party which recommends leaving the Euro?

The answers to this question I got could be divided into two groups:

Answer a)  Cyrille,  Migeru,  afew, (maybe melo):
We need a credible threat to leave the Euro, to change the European institutional setup. The exact nature of the changes has not been spelled out, but from our discussion on this blog it is quite clear that what would be needed is, i) changes to the 'Stability and Growth Pact', ii) The possibility for the ECB to directly finance gouvernments. iii) maybe a higher inflation target.

Migeru later specified:


Unless and until Article 123 of the Treaty on the Functioning of the European Union (Article 104 of Maastricht Treaty) is repealed, all the rest is cosmetic.

Which is basically my point ii). I completely agree that this is the most crucial point.

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This, my friends, is why we can't have nice things

by Migeru Sat Nov 29th, 2014 at 12:16:24 PM EST

Earlier today in the European Parliament, Jean Claude-Juncker introduced his much-touted €300bn investment plan with these words:

I often hear that we need 'fresh' money. What I believe we really need is a fresh start and fresh investment. Others say we need more debt. We do not. National budgets are already stretched. The EU operates on balanced budgets and the abundant liquidity can allow Europe to grow without creating new debt. We will not betray our children and grandchildren and write more checks that they will ultimately have to pay off. We will not betray the rules of the Stability and Growth Pact that we have agreed jointly - this is a matter of credibility.

cross-posted on The Court Astrologer

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Geoengineering for fun and money.

by Colman Wed Nov 26th, 2014 at 06:06:10 AM EST

Given that there's no way that we're going to get our act together and get emissions under control before we completely screw up climate for ourselves, we're going to have to think about what we can do to ameliorate things.

Bad news on that:

Prof Piers Forster of Leeds University said: "We have found that between 1.2 and 4.1 billion people could be adversely affected by changes in rainfall patterns.

"The most striking example of a downside would be the complete drying-out of the Sahel region of Africa - that would be very difficult to adapt to for those substantial populations - and that happens across all the scenarios."

Despite the risk of catastrophic side-effects from geo-engineering, the study authors believe that research should continue just in case runaway warming leaves no other options.

Prof Forster said: "If we were in a really desperate situation, trying to cool the temps for a 10-20 year time period, there could be some merit in those circumstances in introducing solar radiation management to give you a 10-20 year time period."(BBC)

And it would disrupt the Indian monsoons.

Fun, fun, fun.

Comments >> (37 comments)

Austrian groundhog decade

by Cyrille Mon Nov 24th, 2014 at 05:22:27 AM EST

Via Paul Krugman, I see that Peter Schiff had this to say:

"The truth is that high levels of unemployment are historically correlated with higher inflation and low levels of unemployment with lower inflation. That is because an economy that more fully utilizes labor resources is more productive. More production brings down prices."

What??? Leave aside that pretty much everything in the Austrian worldview has been thoroughly refuted by evidence over the past 7 years -actually they will force you to leave it aside as they claim that Austrian economics is pure logic that is not refutable by evidence (handy, isn't it). Just look at the statement and... what???

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Joschka Fischer on Vision

by Migeru Fri Nov 7th, 2014 at 01:42:54 AM EST

Tageszeitung has an interview with Joschka Fischer this [Nov 1st..Ed] weekend: ,,Der erste Schritt ist eine Vision" (the first step is a vision, 31 October 2014) on the occasion of his new book advocating a United States of Europe. To the charge that he's being unrealistic in that, he answers with

Woran die EU gegenwärtig krankt, sieht man in allen drei großen aktuellen Krisen: Sowohl in den Sicherheitskrisen in Osteuropa, im Nahen und Mittleren Osten als auch in der Finanzkrise fehlt Europa die politische Kraft, der feste politische Rahmen. Die EU als Staatenverbund reicht dafür nicht mehr aus! Und wie immer in Europa ist der erste Schritt der Realpolitik eine Vision. Wenn ich Frau Merkel etwas vorwerfen muss, ist das ihre visionslose Kleine-Schritte-Politik. Ich habe nichts gegen kleine Schritte, im Gegenteil. Aber man muss wissen, wo das Ziel ist.
We see the present sickness of the EU in all three major current crises: in the security crises in Eastern Europe and the Middle East as well as in the financial crisis, Europe lacks political power or a strong political framework. The EU as a union of states no longer suffices! And as always in Europe, the first step of Realpolitik is a vision. If I have to accuse Mrs. Merkel of something it is her visionless baby-step politics. I have nothing against baby steps, on the contrary. But you have to know what the goal is.
More below the fold

promoted by afew

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LQD: How Depressingly Right We Have Been

by afew Fri Oct 31st, 2014 at 09:15:10 AM EST

Anatole Kaletsky blogs on Reuters:

The takeaway from six years of economic troubles? Keynes was right.

Now that the Federal Reserve has brought its program of quantitative easing to a successful conclusion, while the French and German governments have ended their shadow-boxing over European budget "rules," macroeconomic policy all over the world is entering a period of unusual stability and predictability. Rightly or wrongly, the main advanced economies have reached a settled view on their economic policy choices and are very unlikely to change these in the year or two ahead, whether they succeed or fail. It therefore seems appropriate to consider what we can learn from all the policy experiments conducted around the world since the 2008 crisis.

The main lesson is that government decisions on taxes and public spending have turned out to be more important as drivers of economic activity than the monetary experiments with zero interest rates and quantitative easing that have dominated media and market attention. Fiscal decisions on budget deficits, taxes and public spending have mostly been debated as if they were largely political choices, with much less influence than monetary policy on macroeconomic outcomes such as inflation, growth and employment. Yet the reality has turned out to be the opposite.

Read and discuss.

Comments >> (65 comments)

The Center has Fallen: Polarized Pluralism and Catalan Elections

by ManfromMiddletown Mon Oct 20th, 2014 at 08:46:21 AM EST

Color the staff at The Economist confused. Writing on the current situation in Catalonia, they note:

A three-way game of brinkmanship between Mr Rajoy, Mr Mas and the separatist Catalan Republican Left (ERC) party that props up his government in Catalonia is creating uncertainty. Mr Rajoy has used the constitutional court to block the referendum, though it may take another five months to rule definitively that it is illegal. He offers little else beyond a readiness to talk. ERC proposes civil disobedience, an illegal referendum and, eventually, a unilateral declaration of independence. If it cannot have these, it wants an election that it is likely to win.

While the results are uncertain, the probability of a snap election is increasing daily.  As is the collapse of CiU dominance of the Catalan regional politics, and the emergence of a form of polarized pluralism in the region as the political center flattens out, and the fringes rise.  The term postmodern 1930s certainly springs to mind. Stage set.

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The Gods are Merciful!

by Colman Thu Oct 16th, 2014 at 07:50:26 AM EST

Ireland has had its first “post-Austerity” budget, with modest decreases in taxes and very modest increases in social support payments and spending. The economy is growing, slowly, and is expected to accelerate. Unemployment is falling, a little, and not just because of emigration.

The prophets of austerity tell us that “The volcano has settled down! The Gods have been merciful! Throwing those virgins in was worth it, just like we told you! Never doubt us again!”

Of course, just as volcanoes eventually stop erupting, economies eventually recover, especially ones with demographics like Ireland: lots of young people, lots of immigrants, lots of stuff that needs doing. Eventually businesses will work out how to deal with the recession and start making money.

The recovery isn’t a sign that the medicine worked: in fact its weakness and its lateness is a sign that the medicine made the patient much worse, delaying recovery by, in my reckoning, two or three years. At least.

Austerity measures took 30B out of the Irish economy, 20% of government spending, in the depths of a recession. How much growth has that prevented? How much labour has it wasted? How much better off would the Irish economy and the Irish be if the government, at the behest of the Troika, hadn’t stifled the economy every time it naturally tried to recover? 10%?

It’s not even clear, given the multiplier effects, that the debt/GDP ratio wouldn’t be better now if we’d grown the economy than it is.

All throwing virgins into volcanoes achieves is dead virgins. Austerity creates much longer term damage.

Comments >> (15 comments)

Balanced Budget Amendment Task Force B.S.

by ARGeezer Tue Oct 7th, 2014 at 02:12:55 AM EST

Since those with great wealth hold most of the debt issued by the US Government in the form of bonds, and since they have disproportionate influence on Congress via large campaign contributions they could insist that the government buy back their bonds and retire them. But they don't because that is not what they really want. The main reason they hold this debt is that there are no alternative investments they find attractive. The USA desperately needs to build a renewable energy and transportation infrastructure before the cost of fossil fuels makes such an investment much more expensive, and building that infrastructure now would cap the cost of electricity, as there is no fuel cost for renewables, so renewables come on line first, per the Merit Order Effect. But this would cut into the profits from their fossil fuel holdings. The real reason they are pushing this faux debt crisis is to provide a reason to cut program they despise - namely anything that benefits the average citizen: food stamps, long term unemployment, Social Security and Medicare.

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The Barons, the Empire Builder and the Czar

by DoDo Fri Oct 3rd, 2014 at 02:12:25 PM EST

When the expanding transcontinental railroads completed the conquest of Native American lands in the Western USA from the 1860s, the owners of these exclusively private companies weren't exactly popular. The public's view was that they are selfish money-men seeking to cash out fast while they provide a crap service on shoddily-built infrastructure, seek monopolistic power and blackmail farmers, and buy politicians: the perfect example of the excesses of unfettered capitalism. The public backlash against the railroad Robber Barons led to anti-trust laws (Sherman Act, 1890).

More than half a century later, philosopher and cult leader Ayn Rand sought to re-interpret the Robber Baron era of US railroads by blaming those excesses of capitalism on state meddling, in the form of land grants. Her counter-example was one of the most successful railroad barons in the West: James J. Hill, nicknamed "The Empire Builder", who built his empire without any land grants.

Reading up on the history of the transcontinental railroads another half a century after, I drew the conclusion that neither of the two views was entirely correct, and see the importance of a different key factor: a general shortage of capital of these private companies. In this respect, the railroad baron I see as most noteworthy and significant is one of the last: E. H. Harriman, nicknamed the "The Railroad Czar", whose legacy lasts to this day.

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Wot's It All About, Juncker?

by afew Tue Sep 30th, 2014 at 04:15:33 PM EST

A number of Jean-Claude Juncker's proposals for the new European Commission are causing quite a stir as the designated commissioners come up for review before the European Parliament.

Schulz flashes red light for Juncker: Put in sustainability | EurActiv

EXCLUSIVE:  European Parliament President Martin Schulz has sent a letter to Jean-Claude Juncker, urging the European Commission President-elect to include sustainable development in the portfolio of Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness.

Schulz has taken on the request introduced by the Parliament’s chair of the Committee on the Environment, Public Health and Food Safety, Giovanni La Via, and by the coordinators of the five main political groups (EPP, S&D, ALDE, GUE/NGL and Greens/EFA).

Lawmakers are flagging a clear risk that environmental, climate and fisheries policies are demoted in the Juncker Commission, as the President-elect seems to put more emphasis on economic growth than protecting the environment.

The feeling that the environment in general is more than low priority for Juncker is underlined by his intention to bring together the Energy and Climate Change portfolios into one, and to hand it to Miguel Arias Canete. Canete will be up before Parliament tomorrow. More below the fold about why he should be rejected and what you can do to help bring that about.

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Vampire Squid and the Fed

by Crazy Horse Mon Sep 29th, 2014 at 02:13:21 PM EST

I haven't read through (or listened to) a story Michael Lewis is pushing regarding the  NY Fed's "Regulation" of Big Banks ; with a transaction between Goldman and Santander as a highlight.

I don't know if this story appears elsewhere on ET in the past days, but immediately felt I should post it here.

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The economics of saving the world

by Cyrille Wed Sep 24th, 2014 at 02:11:24 AM EST

In his New York Times column, Paul Krugman reports on two new studies, both of which indicate that limiting carbon emissions would be much cheaper than initially thought, and may actually increase economic growth. This would be in part because fossil fuels have negative side effects over and above global warming, in particular health effects that "drive up medical costs and reduce productivity".

Further in his column, he takes a swipe at those on the left who claim that "saving the planet requires an end to growth" (a position he calls "climate despair", such as groups like the degrowth movement and the Post-Carbon Institute. This, he reckons, is in large part due to a misunderstanding of what growth is, where those making such claims probably see it as a "crude, physical thing, a matter simply of producing more stuff, [not taking] into account the many choices -- about what to consume, about which technologies to use -- that go into producing a dollar's worth of G.D.P."

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Catalan scenarios

by Migeru Sun Sep 21st, 2014 at 03:47:43 AM EST

Now that Scotland voted 'no' in its independence referendum, the focus should shift to Catalonia and its campaign to hold an independence referendum on November 9. The referendum is opposed by the Spanish government. The Catalan regional parliament petitioned the Spanish parliament for the right to hold an independence referendum but was rejected. The Catalan parliament has just passed a "consultation law" intended to legalize the vote, which will be challenged shortly by the Spanish government in the Constitutional Court, which is expected to strike it down, at which point all bets are off.

It is my opinion that Catalan Premier Artus Mas of CiU jumped on the independence bandwagon two years ago only because his government was on the verge of collapse from the independentist challenge from the street and the looming insolvency of his government brougth about by the crisis and his own austerity policies. The Spanish government took the chance to bail out the Catalan government with austerian strings attached.

Below the fold, an enumeration of possible scenarios for the coming autumn of discontent.

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Scottish Referendum Open Thread

by afew Thu Sep 18th, 2014 at 02:46:24 AM EST

Today's the day. Use this as an open thread on Scotland and all things Scottish. But, please, no photos of Braveheart.

Comments >> (119 comments)

My Call is Scotland to Vote Yes By A Good Margin

by ChrisCook Sun Sep 14th, 2014 at 01:41:41 AM EST

Here from my Eagle's Nest in Linlithgow, in Scotland's Central Belt, I thought it would be rude not to chip in my thoughts as to next Thursday's referendum vote.

My first data points are historic election turnout figures in Scotland covering both UK & Scottish Parliament Elections.

Election Turnouts 1997 to 2011

Then there's the 2011 Scottish Parliament Election outright win for the SNP which the voting system had pretty much been gerrymandered to prevent. I assume that very few of those voting SNP in 2011 will either abstain or vote No.

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Why Scotland may now vote YES to independence

by Frank Schnittger Thu Sep 11th, 2014 at 04:18:10 AM EST

Luis de Sousa's excellent diary has provoked a long comment by me saying a lot of things I've been meaning to say for some time, but which are not all a direct response to his thoughts.  So I think a separate diary is merited analyzing what has changed in the Scottish Independence debate.

What I think has shifted the debate in Scotland is the realization that institutions and assets which they had always been told were British, were in fact English.

Thus the Pound Sterling belongs to England (the central bank name: Bank of England should have been a giveaway).  The military bases and manufacturing facilities in Scotland will be moved south - proving that the Army and associated industries belong to England not all of Britain.  And the general sense that the Scots will have to develop all institutions and skills of Governance from scratch - as if Scots have had no hand act or part of the Departments of State in Whitehall.

In other words the implied blackmail of taking all these things away has only confirmed that Scotland was being ruled not just from, but by, England in the first place.  Parties to a divorce normally split their joint assets and one party cannot claim virtually all the house and contents as their own: and yet this is partly what the No campaign have been claiming.

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Scotland independence: the case for Yes

by Luis de Sousa Tue Sep 9th, 2014 at 04:28:55 AM EST

Thursday the 18th Scotland is going to vote what may well be the most important political decision in several centuries for itself and the UK. The reasons that prompted this process are many: the perception of a slow derision of Scottish identity and culture, the crystallisation of the UK's democracy (where non elected individuals still retain important powers), natural resources, budget sharing, NATO, just to name a few.  

I am not Scottish, nor do I live in Scotland, thus I can not possibly fathom everything driving the vote. But one exercise I can make: assess the economic risks associated with the decision. And by doing so the complexity of this question becomes apparent, as so how uncertain is the outcome.

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News and Views

 20-21 December 2014

by DoDo - Dec 19, 31 comments

Your take on today's news media

 19 December 2014

by In Wales - Dec 18, 44 comments

Your take on today's news media

 New Weekend OT

by afew - Dec 19, 15 comments

Getting seriously solsticy

 Weekend Over OT

by afew - Dec 16, 21 comments

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