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Lessons from the financial crisis

by JakeS Wed Apr 20th, 2011 at 04:35:38 AM EST

(That probably will not be learned)

Lesson 1: The state of readiness of our financial regulators at the start of the crisis was is contemptible.

Part of this is, of course, due to political obstructionism, but I think a large part of it is simply that financial regulators lack routine when it comes to placing large financial institutions in receivership. I think we'd get pretty far if we could get the financial regulator to hold regular (say, monthly) in-house drills of how to resolve banks, plus yearly "war games" where they play out some disaster scenario (attack on the currency, collapse in the real estate market, etc.). Drills serve both to familiarise people with the unfamiliar and to provide regulators with a weight of authority to counter political obstruction.

Lesson 2: Federal currency, state-level fiscal policy, persistent interstate trade surplus: Pick any two.

Lesson 3: Low inflation, heterogenous currency union, state-level fiscal policy: Pick any two.

front-paged by afew


Lesson 4: A country can only guarantee its currency against appreciation, not depreciation.

Corollary: The primary responsibility for maintaining a currency union rests with the strong currencies.

This one really should have been learned already in 1993.

Lesson 5: Gutting public spending during a recession is how you turn the recession into a depression.

The fact that we still have to remind people of this three quarters of a century after the Great Depression decisively proved it is somewhat depressing.

Lesson 6: The discount window enables a central bank to keep certain lines of credit alive, even as the rest of the financial system burns.

This has a number of interesting applications. For one thing, if the central bank provides liquidity through the discount window, it will get a near-realtime picture of the balance sheets of the private banks. For another, by jacking up reserve requirements, the central bank can discriminate the cost of funding between different sorts of lending. And third, by refusing to rediscount purely speculative loans, the central bank can ensure that it will not be the sucker during a Soros attack (and potentially prevent it altogether if no other sufficiently big sucker can be found).

- Jake

Display:
Fast, cheap, good: pick any two.

You can't be me, I'm taken
by Sven Triloqvist on Wed Apr 20th, 2011 at 05:41:21 AM EST
hits all the buttons.

I'm going to have to give you royalties.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Wed Apr 20th, 2011 at 07:06:37 AM EST
I think a large part of it is simply that financial regulators lack routine when it comes to placing large financial institutions in receivership.

But this is giving credit to the whole TBTF mythos. It has been over two and a half years since the crisis in Sept. & Oct. '08 -- certainly plenty of time to plan and thoroughly game various methods to "resolve" the biggest bank in the world. But is there any indication that any responsible organization has done just that?

I do not believe there is the political will to effectively deal with these problems. Instead, the entire resources of the bottom 98% of the population in the US, the UK and various other countries has been tapped and thrown under the collapsing houses of cards built by the various "Masters of the Universe". Is there ANY evidence that the total exposure and total risk of world wide financial collapse has declined?

What the world needs is a year in which to play out a Seven No-Trump contract in the world financial sectors. Ideally, it would be refereed by officials who had some concern for the bottom 99% of the populations of the concerned countries. In reality, it will occur but the financial elites will be allowed to make up the rules as they go and to their advantage. This could be the greatest calamity and involve the greatest loss of life the world has ever seen.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Apr 20th, 2011 at 03:23:19 PM EST
In large part, the TBTF mythos is viable because the financial regulator has no experience with resolving systemically important banks.

And there's a variety of reasons you can't drill that sort of thing during the crisis:

  1. Resolving the banks today would not restore the economy - for that, you need ye olde Keynesian fiscal policy. Speedy bank resolution is what you do to avert a crisis, not what you do to cure it.

  2. When a policy has been decided upon - no matter how wrong-headed - a certain amount of institutional inertia sets in. If, three years ago, resolving the big banks seemed like an intimidating task, then it is unlikely that it will have become any less intimidating as the economy went down the crapper.

  3. You want to conduct these drills while confidence is high. If you drill for the supposedly impossible while it still seems impossible to The Serious People, you will just seem overly cautious. If you begin gaming out major bank resolutions and speculative attacks on your currency when it is unspoken common knowledge that your banks are insolvent and your currency too high, then they risk becoming self-fulfilling prophesies.

- Jake

Friends come and go. Enemies accumulate.
by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Apr 20th, 2011 at 04:42:10 PM EST
[ Parent ]
I ask again:
It has been over two and a half years since the crisis in Sept. & Oct. '08 -- certainly plenty of time to plan and thoroughly game various methods to "resolve" the biggest bank in the world. But is there any indication that any responsible organization has done just that?

By now is is becoming a permanent state of financial crisis and the way it is being managed, IMO, is making the eventual result worse. I wish someone could convince me otherwise.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Apr 20th, 2011 at 05:27:08 PM EST
[ Parent ]
very clear comment, makes it easy to understand.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Wed Apr 20th, 2011 at 05:37:38 PM EST
[ Parent ]
If you begin gaming out major bank resolutions and speculative attacks on your currency when it is unspoken common knowledge that your banks are insolvent and your currency too high, then they risk becoming self-fulfilling prophesies.

This is a rationale for keeping one's head in the sand. And it is unspoken common knowledge that our banks are insolvent. Currencies vary in relative valuation. But if we take this "unspoken common knowledge" seriously, we can be certain that some of the large players ARE gaming the system NOW. Their focus is Greece, Ireland, Portugal and Spain. The time for the USA, the UK, France and Germany will come. China may well crash of its own accord. Responsible people HAD BETTER be gaming several of the more likely scenarios as they are almost certain to have to be playing them out for real, some of them by the end of this summer.

What we have, seems to me, is ideologically driven learned helplessness. It was learned so as to facilitate looting by the elites and now is retained to justify even vaster looting in the name of "financial stability". But it is not and cannot provide stability. Until and unless that mindset is broken the crises are going to be getting worse and worse and more and more frequent.

As long as fraudster banksters are considered too big to prosecute the con continues to run. The longer it runs the bigger the final toll.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Apr 20th, 2011 at 05:39:38 PM EST
[ Parent ]
The "Serious People" have learned and will learn nothing. The most likely outcome is fascist states presiding over a great die-off on behalf of a predatory elite. One thing is certain. If we presume the situation cannot be changed it is highly unlikely to be changed.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Apr 20th, 2011 at 05:43:46 PM EST
[ Parent ]
ARGeezer:
If you begin gaming out major bank resolutions and speculative attacks on your currency when it is unspoken common knowledge that your banks are insolvent and your currency too high, then they risk becoming self-fulfilling prophesies.

This is a rationale for keeping one's head in the sand.

same syndrome as nuclear power! if we cost for all the eventualities it would be obvious why it's suicidally stupid, so it's extend'n'pretend there too.

fuku what?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed Apr 20th, 2011 at 05:46:07 PM EST
[ Parent ]
We agree on most of that. It's just that that's not the financial regulator's job. That's the public prosecutor's job. The financial regulator's job was to make sure that this sort of cock-up didn't happen in the first place, or that, if it did, it was contained before it spilled over into the real economy. And as we all know, it's a couple of years late and a few trillion € short for that...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Apr 20th, 2011 at 06:21:09 PM EST
[ Parent ]
Agreed. But if the regulator are to have any relevance going forward it is incumbent on them to prepare for the next big test they will face. Else, what is the point of their existence? Perceptions be damned. If they cannot prevent the dam from bursting, they at least should warn of the danger.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Apr 20th, 2011 at 07:16:39 PM EST
[ Parent ]
It's just that that's not the financial regulator's job.

If not it is because they work for the looters, not the public. The Fed is the most powerful regulator in the US financial system and it has something called Open Market Operations. So do other central banks. We have discussed here on ET possible scenarios whereby central banks could have burned speculators in vulnerable countries bond debt.

But it seems the most basic reason they will not do this is not one of feasibility, but one of where the loyalties lie. In the case of the Fed, it should be taken down, Fed chairmen, past and present, should be prosecuted and the various "cash for trash" repos should be handed back to those from who they came for whatever assets those institutions possess. There would be pain, but there would then be the possibility of healing. All there is now is the likelihood of the host society being killed by the parasitical financial sector.

There is no justification for the continued existence of the Fed in its current form. The con must end and the sooner the better.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Apr 20th, 2011 at 07:26:38 PM EST
[ Parent ]
But the UK, US, Germany{} and China have a central bank. They cannot be crashed in the same way that state governments like (west to east) Ireland, Portugal, Spain, Italy or Greece can be.

{ Well, not formally, but de facto they have the ECB}

Their currencies can only be "attacked" if they make the mistake of trying to overvalue them ~ which is why the Chinese currency is presently immune to speculative attack and if they make prudent use of the Singapore basket peg, can remain immune to speculative attack.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Apr 23rd, 2011 at 07:53:18 PM EST
[ Parent ]
Well, the USA is certainly far from promoting an overvalued currency either. It could be that the USA and China are now, de facto, in a competitive devaluation situation for reasons other than balance of trade. But it seems to me that in all of the countries concerned the central banks, which, unsurprisingly, work in the interests of financial elites, are inherently in competition with other central banks and that when one or more of these central banks are captured by fraudsters who also have control of the government and the legal system it is very bad news for everyone else, who will only be left with the scraps the fraudsters find inconvenient or not worthwhile to grab.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Apr 24th, 2011 at 07:46:13 AM EST
[ Parent ]
... is a speculative question. If we in the next ten years begin to get our shit together, it may well be undervalued now.

If we stay on the present track, its overvalued.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Apr 24th, 2011 at 02:05:13 PM EST
[ Parent ]
I didn't intend any estimate as to the appropriateness of the current evaluation of the $US, only as to the effect of current policy on that valuation. :-)

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Apr 24th, 2011 at 04:30:36 PM EST
[ Parent ]
US administrations always make at least lip service to an over-valued (that is, aggressively anti-export) USD ... but in the language of "strong" and "weak", how could you favor "weak"?

The administration actions regarding the long term value of the dollar are, of course, their actions with respect to promoting or discouraging improved productivity. So the Bush administration would have to be judged an aggressive pursuer of a "weak" dollar, via their pursuit of a banana republic economy, while the Obama administration might be judged as a weak pursuer of a "strong" dollar, but quite easily diverted form that policy.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Apr 24th, 2011 at 08:32:57 PM EST
[ Parent ]
I am reminded of Paul H. O'Neill's famous comments about "Strong Dollar":

``When I was Secretary of the Treasury I was not supposed to say anything but `strong dollar, strong dollar,''' O'Neill said today. ``I argued then and would argue now that the idea of a strong dollar policy is a vacuous notion.''

....

``The markets actually have control over those relationships. When people say strong dollar, if they don't mean that `we believe intervention can work and we're prepared to intervene,' then `strong dollar' is ridiculous.''

It may have been O'Neill who defined "Strong Dollar" as "Stocks up, bonds up, dollar up and gold down" and what ever it takes to accomplish that. I think the quote is somewhere in my Gibson's Paradox diary.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 25th, 2011 at 01:07:38 AM EST
[ Parent ]
Yes, "strong dollar" as the natural exchange market consequence of inflows into US capital markets would be something that would make the people that make both transactions and capital gains incomes off of US capital markets happy ~ it generates income, and makes it cheaper to use that income to buy stuff around the world.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Mon Apr 25th, 2011 at 03:55:30 PM EST
[ Parent ]
Actually it was Jim Richter who "clarified" the mechanics of "Strong Dollar":

Do you remember the "Strong Dollar Policy," as enunciated by President Clinton's Treasury Secretary, Robert Rubin? It turns out that this was nothing more than a scheme by which to have the best of all possible worlds: Stock market? UP! Interest rates? DOWN! Bond prices? UP! Dollar? UP! Gold? DOWN! How was this accomplished?

Greenspan took care of keeping interest rates low. This bred a series of asset bubbles, culminating in the real estate bubble which began deflating in 2007, leaving a giant unpayable debt bubble in its wake. Gold was, allegedly, kept down first by leasing gold reserves to bullion banks who then sold it to the public and then, increasingly, by the bullion banks selling naked shorts and puts on gold, with their losses, recently at least, likely made good by QE money. This worked quite well -- except for the periodic bursting of asset bubbles -- which, of course, no one could see coming -- until The Masters of The Universe lost control of too many variables. The chief among these was loosing control of the real estate bubble, especially the MBSs, CDOs etc. It was not until 2009 that the precious metals markets took off -- after too many people caught on to the manipulation of precious metal prices and the vulnerabilities this created, especially in the silver market, where, allegedly, many times the world total availability of silver bullion has been sold short, setting the stage for a short squeeze.

Time will tell.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 26th, 2011 at 11:07:18 AM EST
[ Parent ]
Greenspan took care of keeping interest rates low. This bred a series of asset bubbles, culminating in the real estate bubble which began deflating in 2007

No, no, no, no.

Relaxation of lending standards and margin requirements make bubbles. Low interest rates have nothing to do with it. You get bubbles at 7 % rates. You get bubbles at 3 % rates. You get bubbles at 0 % rates. Hell, the broker's rate touched 12 % for a while during the spring of 1929. When you have that sort of short-term returns to speculative activity, fiddling with the rediscount rate barely amounts to a rounding error.

Yes, you can kill a debt bubble by jacking up interest rates, in the same way that you can kill inflation by jacking up interest rates: By killing your economy so dead that nobody has the confidence required for price increases or borrowing. That is the stupid way to do it.

The smart way to do it is by jacking up margin requirements, because that leaves interest rates unchanged for viable borrowers and sends them through the roof for Ponzi scams.

The "low interest rates lead to bubbles" narrative is a right-wing narrative. You do not want to push that. The reality-based narrative is "low margin requirements lead to bubbles."

Greenspan fueled the bubble by cheerleading on the bubble, by lobbying against all meaningful regulatory reform, by failing to police the Fed's member banks. He did not fuel the bubble by not killing the American economy completely dead in 2003, any more than convenience store clerks encourage robberies by not having capsules of sarin gas under the counter.

It was not until 2009 that the precious metals markets took off -- after too many people caught on to the manipulation of precious metal prices and the vulnerabilities this created, especially in the silver market, where, allegedly, many times the world total availability of silver bullion has been sold short, setting the stage for a short squeeze.

What is it with the goldbuggery? Who cares about the precious metal market? Precious metals don't have nearly enough industrial applications to be critical to the actual production of goods and services.

Everybody who's been paying attention knows the stock markets and the precious metal markets are being played. But of all the places the compulsive gamblers who missed the Vegas exit and drove on to New York can get their fix, let it be the precious metal markets. They do far less damage there than when they're gambling with ForEx or rice futures.

Just please don't base public policy on their antics.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Apr 26th, 2011 at 11:54:32 AM EST
[ Parent ]
Make this a diary. I was going to reply along the lines of
No, no, no, no.

Relaxation of lending standards and margin requirements make bubbles. Low interest rates have nothing to do with it. You get bubbles at 7 % rates. You get bubbles at 3 % rates. You get bubbles at 0 % rates. Hell, the broker's rate touched 12 % for a while during the spring of 1929. When you have that sort of short-term returns to speculative activity, fiddling with the rediscount rate barely amounts to a rounding error.

but you beat me to it.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Tue Apr 26th, 2011 at 12:06:43 PM EST
[ Parent ]
Clicky.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Apr 26th, 2011 at 02:35:14 PM EST
[ Parent ]
What is it with the goldbuggery?

Think it comes down to:

  1.  Humans have a decided preference, like magpies, for finding and hording bright shiny objects.

  2.  People who think too much and too long about money and monetary policy go insane.

:-)


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Tue Apr 26th, 2011 at 12:07:20 PM EST
[ Parent ]
But it needs to be rare, shiny objects.

Aluminium - Wikipedia, the free encyclopedia

Although aluminium is the most abundant metallic element in the Earth's crust, it is never found in free, metallic form, and it was once considered a precious metal more valuable than gold. Napoleon III, Emperor of France, is reputed to have given a banquet where the most honoured guests were given aluminium utensils, while the others made do with gold.[19][20] The Washington Monument was completed, with the 100 ounce (2.8 kg) aluminium capstone being put in place on December 6, 1884, in an elaborate dedication ceremony. It was the largest single piece of aluminium cast at the time, when aluminium was as expensive as silver.[21] Aluminium has been produced in commercial quantities for just over 100 years.


Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Wed Apr 27th, 2011 at 03:26:13 AM EST
[ Parent ]
Yeah, --but to the magpie, it doesn't matter whether the gum wrapper is Wrigley's or Juicy Fruit. :-)

Capitalism searches out the darkest corners of human potential, and mainlines them.
by geezer in Paris (risico at wanadoo(flypoop)fr) on Sat Apr 30th, 2011 at 01:46:35 AM EST
[ Parent ]
Well, at least during the first five years of this century Greenspan actively encouraged a relaxation of lending standards in real estate. What US actions, other than the relatively low interest rates, contributed to the Asian and Russian debt crises? I thought that the US banks got to play in a carry trade financed by cheap US money. The Y2K bubble was certainly also encouraged by direct spending on infrastructure and rationalized as a prophylactic against Y2K bugs. But thanks for the comments about the feasibility of bubbles even with high interest rates. At this point that is an historical curiosity, living as we do at the lower bound of interest rate policy.

As to goldbuggery, I certainly do not recommend return to a gold standard. That would be a disaster. But I do strongly suspect that the price of precious metals has been strongly manipulated downwards for psychological impact on market participants and that, especially in the silver market, this has gotten out of control. It IS a very small market but, if some of the PM analysts are right about the size of the naked shorts, an unwind could do major damage to JP Morgan.

I missed most of the bull markets in stocks due to believing, not without reason, that the basics were bullshit. I think I have finally found a way to play bullshit to my advantage, especially in silver, where I am approaching a 200% gain since Aug. '09, so indulge me that, ok? There are risks, but doing nothing seems even riskier. After all, "Strong Dollar" doesn't buy much gas these days.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 26th, 2011 at 12:17:48 PM EST
[ Parent ]
ARGeezer:
What US actions, other than the relatively low interest rates, contributed to the Asian and Russian debt crises?
I thought the Assian and Russian debt crises of 1997-8 were due to liberalization and deregulation of the respective economies, with "hot capital" coming from the US playing the role of the trigger, not the primer.

The important US actions were through policy influence on the IMF, the close ties between the latter and the US Treasury, and propaganda bombardment about the superiority of deregulated capitalism as an economic model.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Apr 26th, 2011 at 12:33:13 PM EST
[ Parent ]
You are right. A look at the St. Louis Fed's site shows that rates ranged from 8.2% in January 1009 down to 2.96% in April and December of 1993 and then back up to 6.05 in April of 1995 and back down into the mid 5s by Jan. 1996, where it remained until 1Q 2000, when it began its climb back to above 6.5% by Sept. 2000, (happy election, W), to drop back down to mid 5s in Feb 2001, from where it dropped to 1.01% by Sept. 2003.

And that was surely an improvement over the drastic rates that prevailed in the early 90s and in the 80s. A case could be made that Greenspan didn't really turn malignant until "W" took office. But with the Clinton Administration running a budget surplus in 2000 a significant tightening by the Fed could reasonably be expected to burst the tech bubble, which may have been the intent. So Greenspan could more likely be accused of keeping policy too tight under Clinton.

Of course there was the ongoing deregulation of the financial sector and the policy direction of supporting sending manufacturing offshore that had been explicit in NAFTA but which showed up more strikingly with China. Perhaps, as you suggest, diplomatic pressure on various financial agreements was more important to the various '90s bubbles. On the home front refusing Brooksly Born  the authority to regulate derivatives, for which she had been advocating for some time, which came to a head in May, 1998 and which was strenuously opposed by Greenspan, Rubin and Summers, who were joined by in early May by Arthur Levitt, Chairman of the SEC.

Had she gotten the authority in early 1998 that would certainly have been blamed as THE cause of the LTCM collapse later that year and attempts likely would have been made to hang the Russian and Asian crises around her neck as well. Had she gotten the authority earlier, say in 1995, some of these crises may have been averted or mitigated, but we will never know.

Thanks for forcing me to look at the record regarding interest rates. Somewhere I had gotten a false impression of Greenspan's activities in the '90s.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 26th, 2011 at 03:08:26 PM EST
[ Parent ]
A case could be made that Greenspan didn't really turn malignant until "W" took office.

Oh no, 'Bubbles' Greenspan has always been a malignant little toad. Under Ronnie Raygun he pushed for higher payroll taxes and lower marginal taxes. Under Clinton he simultaneously helped block regulation of derivatives and did his best to strangle the recovery with his austerity nonsense. And under Bush the Lesser, he was cheerleading on bubbles and pushing for more deregulation.

He is, bar none, the worst chairman the Fed has ever had. And yes, that includes the Volker chairmanship that killed off half the US manufacturing base.

Which is why it's a little depressing to see him slimed for the one single sound policy decision he has ever made. It's such a target rich environment that there really should be no need for friendly fire.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Apr 26th, 2011 at 03:48:37 PM EST
[ Parent ]
Well, at least during the first five years of this century Greenspan actively encouraged a relaxation of lending standards in real estate.

Yes. Precisely. Go after him for that, not for his interest rate policy. There is nothing wrong with low interest rates. There is everything wrong with adjustable-rate mortgages and NINJA loans.

What US actions, other than the relatively low interest rates, contributed to the Asian and Russian debt crises?

The Asian crisis didn't have much of anything to do with US policy - that was driven by the end of the Yen carry trade, a carry trade that had gotten started in the deflationary environment in the early '90s, which was caused by the bursting of the 1980s Japanese bubble, caused in turn by aggressive offshoring hollowing out the real value added by the Japanese economy.

The Russian crisis was caused by Timmy Geithner and the rape-and-run "transition" policies foisted on Russia during the '90s.

The Y2K bubble was certainly also encouraged by direct spending on infrastructure and rationalized as a prophylactic against Y2K bugs.

And the repeal of Glass-Steagall, and the deregulation of the futures markets, and the (further) deregulation of mergers and acquisitions, and the lowering of the corporate tax rate.

But thanks for the comments about the feasibility of bubbles even with high interest rates. At this point that is an historical curiosity, living as we do at the lower bound of interest rate policy.

No, it's not, because unless you remember that bubble formation is independent of interest rates, you risk concluding that bubbles require low interest rates, and that high interest rates can kill bubbles before they kill the rest of the economy.

But I do strongly suspect that the price of precious metals has been strongly manipulated

Well, duh. The price of precious metals is nothing but manipulation. The principal commercial use of precious metals is as a component of Veblen goods - goods that are valuable (almost) exclusively because they are expensive. And even that is dwarfed by the transactions that are purely speculative in nature.

The gold bugs are just bitching that central banks are muscling in on their turf and manipulating the price down instead of up. Because that prevents said gold bugs from fleecing the suckers who go "ooh shiny" quite as hard as they could otherwise. Oh, central banks have no proper business playing that game. But of all the things central banks do that they have no business doing, that strikes me as by far the least harmful.

I think I have finally found a way to play bullshit to my advantage, especially in silver, where I am approaching a 200% gain since Aug. '09, so indulge me that, ok?

By all means, if you've found a way to make money in the precious metal markets, then don't let the fact that it's disconnected from any economic fundamentals discourage you. I like you better than the other croupiers at that particular casino, so I don't begrudge you the money or anything. I just don't see what it has to do with macroeconomics or currency policy.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Apr 26th, 2011 at 02:13:47 PM EST
[ Parent ]
JakeS:
what it has to do with macroeconomics

I think since it is a market where central and big banks play it is important to keep an eye on it. Like CDOs, it is not important in itself but if it gets out of hand you get banks losses, losses transfered to public debt, austerity, etc. By keeping an eye on it now, mounting the argument goes faster if/when it goes down the drain. So while not a gambler I appreciate ARGeezer's reporting.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Apr 27th, 2011 at 03:34:13 AM EST
[ Parent ]
JakeS:
Precious metals don't have nearly enough industrial applications to be critical to the actual production of goods and services.

I suspect that it is so mainly because they are precious which means that they have only been used where it is cost-effective despite the preciousness. So in another timeline they could have had much more applications.

Gold - Wikipedia, the free encyclopedia

Gold produces a deep, intense red color when used as a coloring agent in cranberry glass.


Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Wed Apr 27th, 2011 at 03:25:16 AM EST
[ Parent ]
Well, yes. But it hurts way less to continue to not use a substance that your economy has not become dependent on than it does to stop using a substance that it has become dependent on.

(Another of those little details left out of the orthodox liturgy by the initial assumptions in that box on page 3 that nobody reads.)

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Apr 27th, 2011 at 04:40:31 AM EST
[ Parent ]
ARGeezer:
What the world needs is a year in which to play out a Seven No-Trump contract in the world financial sectors.

historically, Jubilees served to let off pressure and let some mercy in.

on a global level? one can dream...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed Apr 20th, 2011 at 05:41:21 PM EST
[ Parent ]
At least we might see several hundred $trillion notional of derivative bets eliminated.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Apr 20th, 2011 at 05:45:41 PM EST
[ Parent ]
No chance of that. The financial system has moves on form loans to derivatives as means of financing. It's hard to believe, but it's true.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Apr 21st, 2011 at 02:59:17 AM EST
[ Parent ]
The financial system has move(d) on f(ro)m loans to derivatives as means of financing.

Thus default would be on derivatives?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 21st, 2011 at 11:27:53 AM EST
[ Parent ]
Well, states are still issuing bonds, but when it comes to loans, all kinds of public and private entities are financing themselves through bonds because those don't count as "debt". You thought that deal Goldman Sachs[*] structured for Greece was a one-off?

[*] Apparently Mario Draghi, the current frontrunner to succeed Trichet, was involved in this...

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Apr 21st, 2011 at 01:17:20 PM EST
[ Parent ]
So you mean we have no idea about the general state of leverage in our business firms?

Wonderful.

This is legal for what precise reason, again?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Apr 21st, 2011 at 01:27:05 PM EST
[ Parent ]
Which part of "off-balance-sheet liability" is hard to understand?

The problem is with accounting treatment of contingent liabilities.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Apr 21st, 2011 at 01:39:19 PM EST
[ Parent ]
In which alternative reality does it make sense to assume away contingent liabilities? Clearly, if you want to do reality-based accounting, you need to include all contingent liabilities as actual liabilities until and unless you can make a reasonable (as in actuarial) case that either

a) the contingency that would turn the contingent liability into an actual liability will not occur or

b) you have enough uncorrelated [NB! losses on financial assets can never be assumed to be uncorrelated] assets to simply apply a uniform haircut.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Apr 21st, 2011 at 02:15:01 PM EST
[ Parent ]
Financial reality is consensual. You're the one living in an alternative reality since this here reality is defined by the currently agreed accounting practices.

Yeah, this probably means we're FUBAR.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Apr 21st, 2011 at 02:22:19 PM EST
[ Parent ]
But the accounting principles are supposed to be based on the convention that assets are income-generating property, or property with significant resale value, while liabilities are payments that will come due at some future date. The current treatment of contingent liabilities is inconsistent with that principle (as we have just seen).

Incidentally, if I remember my accounting class right, in the Danish version of reality you have to book the full expected value of your contingent liabilities. And I don't think inability to estimate the probability that the contingency occurs will allow you to set the expected value to zero...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Apr 21st, 2011 at 02:55:56 PM EST
[ Parent ]
Incidentally, if I remember my accounting class right, in the Danish version of reality you have to book the full expected value of your contingent liabilities.

Either

  1. that is inconsistent with mark-to-market accounting or equal to it by definition; or
  2. expected value could be zero with a large dispersion in either direction

Regarding 2) suppose you have booked the expected value. You now have a contingent liability and a contingent asset, where only one of the two can be nonzero at any given time. How do you book that?

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Apr 21st, 2011 at 04:22:05 PM EST
[ Parent ]
Ad 1) No. Where there exists a secondary market for contingent liabilities, it is permissible to mark them to market, as one would be able to repurchase them at the market discount.

Where there is no secondary market, however, it is not possible to mark to market. Thus no convention can be inconsistent with the mark-to-market convention. Mark-to-market returns NAN, so any valuation convention which is politically palatable may be applied to illiquid liabilities.

"NAN" is not the same as "zero." This last point is the one that seems to have caused some confusion with AIG et al.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Apr 24th, 2011 at 07:24:49 PM EST
[ Parent ]
who consent to play mind games with contingent liabilities for the (short-term) benefit of their clients, thereby abandoning any pretense of professional ethics.

and it's a cultural problem : much as doctors, for example, are presumed for cultural or historic reasons to always put the health of their patients first, we are expected to credit auditors with impeccable ethics and morals.

But these are not individual professionals who might suffer in reputation or income if they make bad calls on contingent liabilities. They are corporations which are often intimately bound with the entities they audit. So we add moral hazard to arm's length issues.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Fri Apr 22nd, 2011 at 03:44:41 AM EST
[ Parent ]
Also, when a doctor fucks up, people die in front of him and between his hands. When an auditor fucks up, people he's never met and whom he needn't care about die because they are deprived of the ability to see a doctor in the first place.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Apr 22nd, 2011 at 07:32:42 AM EST
[ Parent ]
Genocide by accounting fraud and stupid, special interest serving policies, such as corn ethanol fuel.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Apr 22nd, 2011 at 09:51:40 PM EST
[ Parent ]
all kinds of public and private entities are financing themselves through bonds because those don't count as "debt".

Has this been enshrined in Generally Accepted Accounting Practices? Is the coupon now an expense and the bond an asset to the corporation? And is this the practice in most countries?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 21st, 2011 at 01:39:57 PM EST
[ Parent ]
Gah, I mean derivatives!

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Apr 21st, 2011 at 01:41:56 PM EST
[ Parent ]
You were bending my head out of shape. :-) So the proceeds of selling the bond constitute assets and the bond itself a liability? (Unlike Jake I never took accounting.)

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 21st, 2011 at 05:03:58 PM EST
[ Parent ]
Forget what I typed about bonds and restart here:
The financial system has move(d) on f(ro)m loans to derivatives as means of financing.
Thus default would be on derivatives?
Well, states are still issuing bonds, but when it comes to loans, all kinds of public and private entities are financing themselves through bondsderivatives because those don't count as "debt". You thought that deal Goldman Sachs structured for Greece was a one-off?


Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Apr 21st, 2011 at 05:24:36 PM EST
[ Parent ]
Footnotes [to financial statements] also contain disclosures relating to contingent losses. Firms are required to accrue a loss (recognize a balance sheet liability) when both of the following conditions are met:
  • It is probable that assets have been impaired or a liability has been incurred.
  • The amount of the loss can be reasonably estimated.
If the loss amount lies within a range, the most likely amount should be accrued. When no amount in the range is a better estimate, the firm may report the minimum amount in the range.
SFAS (Statement of Financial Accounting Standards) 5 defines probable events are those "more likely than not" to occur, suggesting that a probability of more than 50% requires recognition of a loss. However, in practice, firms generally report contingencies as losses only when the probability of loss is significantly higher.
Footnote disclosure of (unrecognized) loss contingencies is required when it is reasonable possible (more than remote but less than probable) that a loss has been incurred or when it is probable that a loss has occurred but the amount cannot be reasonably estimated. The standard provides an extensive discussion of loss contingencies.
(Gah)

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Apr 21st, 2011 at 01:46:52 PM EST
[ Parent ]
SFAS (Statement of Financial Accounting Standards) 5 defines probable events are those "more likely than not" to occur, suggesting that a probability of more than 50% requires recognition of a loss. However, in practice, firms generally report contingencies as losses only when the probability of loss is significantly higher.

Translation: Firms generally report contingencies as losses when irrefutable evidence of a loss has made its way into the public domain and can no longer be obfuscated by contrary pronouncements and obsfuscation -- if then.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 21st, 2011 at 08:34:17 PM EST
[ Parent ]
financing themselves through bondsderivatives

Gah.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Apr 21st, 2011 at 01:40:48 PM EST
[ Parent ]
That's the role the Great Depression played ~ though in the unhappiest of a number of alternative ways to eliminate an unsustainable 2.5x national GDP private debt overhand.

Then, for the lucky ones to pick the winning side yet not fight on their own soil, WWII generated a tide of high quality government debt to restore balance sheets.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Apr 23rd, 2011 at 07:55:01 PM EST
[ Parent ]
e-wow, great thread, guys...

the narrative emerging clearly shows the 'through the looking glass' factor.

seems like the whole capitalist world finance industry took a giant left when the shift to derivatives from bonds happened, hard left to La La land...

.... and because we have all been brainwashed into thinking bankers to be risk-averse, the world economy is teetering.

lovely... just peachy

for the buck-aneer banksters

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Fri Apr 29th, 2011 at 10:46:02 AM EST
[ Parent ]
Lesson 2: Federal currency, state-level fiscal policy, persistent interstate trade surplus: Pick any two.

That one has been learned. The EU is in the process of stripping the Eurozone net importers of their national fiscal policies, in order to preserve the federal currency and the intra-EU trade imbalances. They call this the "pact for the Euro", and they tried to sell it as a "competitiveness pact" for about two weeks.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Apr 21st, 2011 at 02:55:39 AM EST
Lesson 3: Low inflation, heterogenous currency union, state-level fiscal policy: Pick any two.

Also learned. See parent comment.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Apr 21st, 2011 at 02:56:27 AM EST
[ Parent ]
The question is, how broadly spread is the lesson? If only the supporters of one pair of the three realize that its a choice, and the supporters of other pairs are not aware that they are being squeezed out when they are conned into supporting the third ... well, then the supporters of the other pairs will get squeezed out by circumstance independent of political balance of power.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sat Apr 23rd, 2011 at 07:58:42 PM EST
[ Parent ]

The EU is in the process of stripping the Eurozone net importers of their national fiscal policies, in order to preserve the federal currency and the intra-EU trade imbalances.

But that's not the lesson - the lesson is that net exporters can have their own fiscal policy either - ie they have to accept pooling of resources or bailouts (whether organised or through default), and that one has NOT been learnt yet.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Mon Apr 25th, 2011 at 05:21:28 AM EST
[ Parent ]
The Control Fraud Theory | Bizcovering
Control fraud theory poses a fundamental challenge to the core models of finance and economics. The efficient markets (and contracts) hypothesis requires that markets be able to identify and exclude control frauds, and the dominant law and economics model asserts that they do so effectively and quickly. This claim is largely premised on the view that no top-tier audit firm would give a clean opinion to a control fraud. Control frauds have consistently falsified this claim. Deposit insurance was not the key to S&L control fraud. Control frauds deceive "creditors at risk." High reported profits allow them to grow rapidly by borrowing and issuing stock.
This also will not be learned as "the core models of finance and economics" appear to have come out of the crisis unscathed, at least as far as the core community of financiers and economists is concerned.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Apr 25th, 2011 at 04:45:42 AM EST
Schneier on Security: Control Fraud quoting a PDF by William K. Black.
White-collar criminology findings falsify several neo-classical economic theories. This paper discusses the predictive failures of the efficient markets hypothesis, the efficient contracts hypothesis and the law & economics theory of corporate law. The paper argues that neo-classical economists' reliance on these flawed models leads them to recommend policies that optimize a criminogenic environment for control fraud. Fortunately, these policies are not routinely adopted in full. When they are, they produce recurrent crises because they eviscerate the institutions and mores vital to make markets and governments more efficient in preventing waves of control fraud. Criminological theories have demonstrated superior predictive and explanatory behavior with regard to perverse economic behavior. This paper discusses two realms of perverse behavior the role of waves of control fraud in producing economic crises and the role that endemic control fraud plays in producing economic stagnation.


Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Apr 25th, 2011 at 05:03:09 AM EST
[ Parent ]
are the "professional services" firms - they need to be broken up so that accounting services and consultancy services (ie tax or accounting "optimisation," also known as regulatory arbitrage)  cannot be provided by the same entities - at all.

Wind power
by Jerome a Paris (etg@eurotrib.com) on Mon Apr 25th, 2011 at 05:23:49 AM EST
[ Parent ]
Breaking them down reduces their political power, but it also increases the amount of resources needed to police their behaviour since you need more inspectors to supervise more firms, even if the total amount of business done by all the firms in the sector stays constant.

And that would be in itself criminogenic: Schneier on Security: Control Fraud

"Systems capacity" theory examines why under deterrence is so common. It shows that, particularly with respect to elite crimes, anti-fraud resources and willpower are commonly so limited that "crime pays." When systems capacity limitations are severe a "criminogenic environment" arises and crime increases. When a criminogenic environment for control fraud occurs it can produce a wave of control fraud.

"Neutralization" theory explores how criminals neutralize moral and social barriers that reduce crime by constraining our decision-making to honest enterprises. The easier individuals are able to neutralize such social restraints, the greater the incidence of crime.

I do think this explains why VAT evasion is so prevalent among small businesses in Spain.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Apr 25th, 2011 at 05:38:28 AM EST
[ Parent ]
But you don't need to police the mercenary accountants who construct tax shelters, as long as you police the auditors who sign off on the cash flow statement. Then you can work from first principles based on the cash flow. Any disagreement may be resolved by telling the firm that their tax lawyers are too aggressive. And that if they persist in their disagreement, they are welcome to a highly public court case that will splash their effective tax rate all over the front pages.

But this requires a truthful and reasonably accurate picture of the cash flow, which is why you have to police the auditors that audit the cash flow statements.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Apr 25th, 2011 at 07:05:55 AM EST
[ Parent ]
But cash flow in cash, without invoices, is almost by definition impossible to audit.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Apr 25th, 2011 at 07:15:05 AM EST
[ Parent ]
Ah, yes, but if you have a reasonably sizeable VAT, then people have an incentive to keep a paper trail. Otherwise, they might find that the VAT that other people have invoiced as having paid to them exceeds their own markup. Which would be bad for the continued viability of their business as a going concern.

Besides, you can't borrow against future cash flow without paper trails. So large and medium-sized firms have an incentive to keep an audit-able paper trail. Particularly if you audit the banks to make sure that the money they issue is backed by an auditable future cash flow.

Small business have cashflows in cash. But small businesses don't do control fraud or aggressive accounting. They do conventional man-with-suitcase fraud, or simply don't disclose their incomes.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Apr 25th, 2011 at 12:03:18 PM EST
[ Parent ]
I do think this explains why VAT evasion is so prevalent among small businesses in Spain.

A sole proprietorship or family business is a control fraud waiting to happen. If one person can control what information gets passed to all others there is not even a requirement for a conspiracy. As one successful small businessman who grossed over $10 million a year once told a friend: "Sometimes I just have to close the door and do things that I never tell anyone else about."


"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 26th, 2011 at 12:42:09 AM EST
[ Parent ]
ARGeezer:
A sole proprietorship or family business is a control fraud waiting to happen.
And, so, in countries with large informal sectors or underground economies, where enforcement is lax or resource-poor, a criminogenic environment is created in which you're considered stupid if you don't steal from your employees, providers, customers and the taxman.

I have lately thought that, if ordinary small businesses are control frauds where poor performance and graft by the owners are normal, it cannot be too hard to run a business profitably. If you don't steal from your own business it should be easier to keep it running.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Apr 26th, 2011 at 05:27:31 AM EST
[ Parent ]
But they don't steal from their business. They steal from everybody else's business. That's sorta the point.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Apr 26th, 2011 at 07:48:28 AM EST
[ Parent ]
See ARGeezer's comment. That's sorta the point.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Tue Apr 26th, 2011 at 10:40:38 AM EST
[ Parent ]
When the contracting company for which I worked more than 17 years was contemplating turning itself into an Employee Stock Ownership Plan company I was discussing the negative attitudes of some of my fellow employees with the ESOP advisor. The problem was that the four partners were seen as having appropriated company property for personal use. All four had extensively and expensively remodeled their homes and things such as new electrical service panels had gone through the warehouse even though we did not use such products on any of our jobs. I just figured that that was something that would stop after ESOP conversion, but others were more skeptical. The advisor told me: "The owners of small companies always look on the company as their personal piggy bank." In this case all four were expected to only loot about the same amount each.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 26th, 2011 at 10:38:20 AM EST
[ Parent ]
Possible to state {some/most} small business owners see the business as an extension of their ego?

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Tue Apr 26th, 2011 at 12:11:54 PM EST
[ Parent ]
I've worked in two closely held firms definitely more in the Medium than Small Enterprise category, but still it was apparent that their internal functioning strongly reflected the personality of the owner/managers.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Tue Apr 26th, 2011 at 12:16:45 PM EST
[ Parent ]
That's my experience as well.  However, spit in one hand, hold anecdotal evidence in the other, and decide which is "more real."

IF it is accurate we've got a fact of no mean importance.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Apr 26th, 2011 at 12:33:39 PM EST
[ Parent ]
"fact" s/b "insight"

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Tue Apr 26th, 2011 at 12:34:31 PM EST
[ Parent ]
Recommended viewing: Gordon Ramsey's Kitchen Nightmares.

Ramsey travels the US and helps restaurants on the brink of bankrupcy. 9 out of 10 times the problems are well known to the staff but the owner is to stubborn to listen.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Apr 27th, 2011 at 03:42:07 AM EST
[ Parent ]
A swedish kind of death:
Ramsey travels the USmostly England and helps restaurants on the brink of bankrupcy


Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Apr 27th, 2011 at 04:19:27 AM EST
[ Parent ]
Either it tells you what you need to know about my observations of what goes on at the telly, or Swedish tv chooses the american episodes on purpose. After all Amazing race is marketed at swedish tv as "see americans who could not find Europe on a map of Europe make fools of themselves" and considering the number of seasons they have shown, I guess that is a succesfull strategy.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Wed Apr 27th, 2011 at 05:58:50 AM EST
[ Parent ]
Oh, right: Kitchen Nightmares - Wikipedia, the free encyclopedia
Kitchen Nightmares is an American reality television series on the Fox network, in which Chef Gordon Ramsay spends a week with a failing restaurant in an attempt to revive the business.[1] It is based on the British show Ramsay's Kitchen Nightmares.


Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Apr 27th, 2011 at 06:00:19 AM EST
[ Parent ]
They tend to see it as something they own*. Explaining the practical difference between "the company's property" and "your property" can be fun. In fact, the person being looted from is the tax man, who generally has a hard time hunting down that sort of income for taxation purposes.

* Which they do.

by Colman (colman at eurotrib.com) on Tue Apr 26th, 2011 at 01:35:13 PM EST
[ Parent ]


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