We should have hung them when they were ten, killing children is wrong...

Congress should act immediately to abolish credit default swaps on the United States, because these derivatives will foment distortions in global currencies and gold. Failure to act now will only mean the U.S. will be forced to act after these "financial weapons of mass destruction" levy heavy casualties. These obligations now settle in euros, but the end game is to settle them in gold. This is so ripe for speculative manipulation that you might as well cover the U.S. map with a bull's-eye.

Credit default swaps are not insurance. If you buy fire insurance on your home, you must own the house. If you buy credit protection on the United States, however, you do not need to own U.S. Treasury bonds. If your protection gains value after you buy it -- not because the U.S. defaults, but because of market mood changes -- you can resell that protection and make a profit.

Lower credit risk means a lower price for protection. Zero implies zero risk. The higher the basis points, the higher the implied risk. When U.S. credit default swaps were first introduced, the price of protection was around two basis points. According to Bloomberg, the price for five-year protection was around 38 basis points on Friday. But the price in the over-the-counter market -- where this stuff actually trades -- was almost double or around 75 basis points.

Last Monday I decided to do one of my silly and - admittedly - childish phone calls under the guise of my Timewaster Letters character, Robin Cooper.

So I switched on LBC (a London talk radio station) where the topic was Gordon Brown's alleged bad temper. I called up and got through almost instantly. "What do you want to talk about?" asked the LBC operator. Without time to think I replied, "Gordon Brown visited my place of work and lost his temper right in front of me". Very soon I was on air, explaining how Gordon Brown had toured my workshop - a 'lamination factory' - and thrown a tangerine into one of the machines, breaking it, before calling a member of staff a 'citric idiot'.  It was all I could think of at the time. A load of nonsense. But I was quite proud of the phrase, 'citric idiot'.

Anyway, skip forward to Friday night. It's midnight. I'm lying in bed, when I get a message on twitter that the tangerine story had been mentioned on BBC Two's The Bubble. I clicked on iPlayer and fourteen minutes in, I see the brilliant David Mitchell telling his guests that Gordon Brown had allegedly thrown a tangerine into a lamination machine.  

What?!

I immediately stuck my phone call up on my site (I'd animated it with my crap drawings), mentioning how it had been picked up on The Bubble. Very soon someone tweeted saying that they'd read about the tangerine incident in the Financial Times. And there was a link! Within seconds, someone else added that it had been in The Telegraph, with the headline: "Gordon Brown accused of throwing a tangerine". The article went on to say, "One of the factory workers told The Sun Mr Brown became angry and threw a tangerine he was holding into a laminating machine".

What is a reasonable per MW estimate of cost to install and operate wind turbines?

The fun of reading through Spanish government records on electric production for a paper that I'm researching made me think that it would be interesting to see how the US compares.

It's interesting, because you can see real differences in the way that different states generate and use electricity.

For example, several states get most of their electricity from nuclear, and some of the biggest coal states have outsized industrial consumption of electricity.

With the new wind power potential estimates, I thought that it would be good to do a diary about the potential and cost of moving away from fossil fuels (natural gas and coal) and towards wind power.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

Hey, check this out.  I have a small original Conrad Kiesel oil on wood (German, famous for nymphs, still reprinted today) which I have been recently trying to get appraised and one of the folks I showed it to said the image was not so "commercial" because of the frown on the older ladies face as she looks disaprovingly at the younger lady whose gown has slipped.  Let's set if I remember the code for the image.  Here is the picture which the parser makes smaller.  Hard to see the expressions.  but click on the image and it is a little bigger.

My son saw the picture which I got from my father and he said "hey, Grandpa's porn!" Funny.

alohapolitics.com

Yesterday I argued that Latvia's cost-cutting efforts are evident compared to a cross-section of European Union countries. Latvia's efforts, while commendable, were very much a function of the emergency IMF loan in December 2008 and the ensuing recession in 2009.

After an email exchange with Marshall Auerback, and thinking more about the cross-section of Europe, I now see a very scary trend emerging across Europe: the fight for exports.

...

Latvia's model: drop wages to increase export income. Greece: drop wages to increase export income. France, Germany, Spain, Portugal, etc., etc. It's impossible that the whole of the Eurozone will drop wages to increase export income. It's especially bad for countries like Latvia or Hungary, where the lion's-share of trade occurs withing the boundaries of Europe.

And what happens when export income does not provide the impetus for aggregate demand growth? Well, there's not much left. Can't devalue the currency (via printing money), and tax revenues will fall faster than a ten-pound weight: rising deficits; rising debt; rising debt service (via surging credit spreads). Sovereign default seems like a near-certainty somewhere in the Eurozone!

A repeat of my most recent wind photodiary (which is also front-paged on The Oil Drum today). For some reason I can't be bothered to post much on dKos these days. US politics seem stuck in confusion lately and there is isn't much to write about.

In the long run, we're all dead. John Maynard Keynes