September 2010 archive

Part 1- Ireland

Irish Ask How Much Is Too Much as Bank Rescue Trumps Austerity

By Joe Brennan and Dara Doyle, Bloomberg News

Sep 2, 2010 5:35 AM ET

Anglo Irish Bank Corp. said Aug. 31 it needs about 25 billion euros ($32.1 billion) in state funding, equivalent to about two-thirds of this year’s tax revenue. Standard & Poor’s, which last week cut the country’s credit rating to AA-, said the state may have to inject as much as 35 billion euros.

…

While Ireland provided the model for euro partners Spain and Greece in implementing tax increases and spending cuts, the bill for bailing out its banks is mounting. That’s left taxpayers, some enduring pay cuts of 13 percent, questioning the wisdom of the government and Dublin-based Anglo Irish’s management in keeping the lender alive.

“Ireland had been seen as leading the way for the rest of Europe in terms of austerity measures, but now the market isn’t too keen on this black box that’s been opened up by the banks,” said David Schnautz, a fixed-income strategist at Commerzbank AG in London. “Investors don’t doubt the willingness of the Irish to accept the pain, but they are beginning to ask if the scale of the banking problem is just too big to handle.”

The government so far has injected almost 33 billion euros into banks and building societies, with two-thirds of that going to Anglo Irish. It has paid a further 13 billion euros for real- estate loans that were once worth 27.2 billion euros, the agency responsible for the debt said on Aug. 23.

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“At this point, the taxpayer has paid enough,” said Brian Lucey, associate professor of finance at Trinity College Dublin. “It’s time to consider strongly if the senior bondholders should bear some pain. The only group that should be totally protected should be the depositors.”

(h/t AmericaBlog)

Paul Krugman, Nobel Prize Winner in Economics– “Contrary to what you may have heard, there’s very little that’s baffling about our problems – at least not if you knew basic, old-fashioned macroeconomics. In fact, someone who learned economics from the original 1948 edition of Samuelson’s textbook would feel pretty much at home in today’s world. If economists seem totally at sea, it’s because they have carefully unlearned the old wisdom. If policy has failed, it’s because policy makers chose not to believe their own models.”

You know, you can’t make a career in Academia by saying ‘problem solved’, it makes for very short papers, so there is a perverse incentive, especially in the Social “Sciences”, to disagree simply to be disagreeable and come up with insane theories about Pyramids being landing platforms for a race of parasite infested Galactic Overlords (I am of course talking about Stargate and not Scientology).

How has that Pyramid scheme worked out?

(L)et’s put politics aside and talk about what we’ve actually learned about economic policy over the past 20 months.

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One group – the group that got almost all the attention – declared that the stimulus was much too large, and would lead to disaster. If you were, say, reading The Wall Street Journal’s opinion pages in early 2009, you would have been repeatedly informed that the Obama plan would lead to skyrocketing interest rates and soaring inflation.

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So what actually happened? The administration’s optimistic forecast was wrong, but which group of pessimists was right about the reasons for that error?

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When in doubt, bet on the markets. The 10-year bond rate was over 3.7 percent when The Journal published that editorial; it’s under 2.7 percent now.

What about inflation? … Sure enough, key measures of inflation have fallen from more than 2 percent before the economic crisis to 1 percent or less now, and Japanese-style deflation is looking like a real possibility.

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The actual lessons of 2009-2010, then, are that scare stories about stimulus are wrong, and that stimulus works when it is applied. But it wasn’t applied on a sufficient scale. And we need another round.

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But politics determines who has the power, not who has the truth. The economic theory behind the Obama stimulus has passed the test of recent events with flying colors…

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So, as I said, here’s hoping that Mr. Obama goes big next week. If he does, he’ll have the facts on his side.

Unfortunately, as Atrios says any action at all at this point looks unlikely.  “Some big, new stimulus plan is not in the offing.”

So given the choice between going big and going home, the Obama Administration has decided to go home.

Day 2 of Zap2it.  I had a longer edition, but it got flushed during my power outage.  Last chance this week for all Keith and Rachel all night long.

College Throwball, some halfway decent movies, and premiers.

• AMC– Troy (watch out for those Golden Apples)
• Comedy– Futurama (last week’s, new, and The Devil’s Hands are Idle Playthings– the original series finale)
• Disney– Camp Rock (Jonas Brothers, but a prelude to tomorrow’s World Premier of Camp Rock 2)
• E!– Bring It On: All or Nothing
• ESPN– Southern Mississippi @ South Carolina
• Food– Extreme Cuisine With Jeff Corwin (Jellied Eel, yum), Ace of Cakes, Family Style (all premiers)
• FX– Final Destination, Lara Croft: Tomb Raider
• Lifetime– Project Runway (premier)
• History– The Universe (Asteroid Attack, premier)
• SciFi– Stephen King’s The Langoliers (everything I hate about Stephen King and poorly acted too)
• Turner Classic– Once Upon a Time in the West (Henry being bad)
• TLC– Sr. v. Jr. (last week’s and new), BBQ Pitmasters (premier)
• TNT– Sahara
• Toon– Monday premier repeat.
• Vs.– Pittsburgh @ Utah
• VH1– Road House (for Swayze fans)

Later-

• AMC– Master and Commander: The Far Side of the World
• ESPN– USC at Hawaii (nice work if you can get it)
• FX– Final Destination (again)
• SciFi– WCG Ultimate Gamer (premier)
• Turner Classic– High Plains Drifter, The Count of Monte Cristo
• USA– House (very first episode)

Dave hosts Will Arnett, Tommy Johnagin, and Karen Elson.  Alton does Sushi (if you knew her like I knew her).  The Better Man, Dr. Orpheus’ back story and Triana dumps Dean.

Evening Edition is an Open Thread

1 Disasters show ‘screaming’ need for action – climate chief

by Alexandra Troubnikoff and Richard Ingham, AFP

Thu Sep 2, 1:19 pm ET

Crossposted at Daily Kos and Docudharma

When I see a 9/11 victim family on television, or whatever, I’m just like, “Oh shut up” I’m so sick of them because they’re always complaining. — Glenn Beck

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Man is man because he is free to operate within the framework of his destiny.  He is free to deliberate, to make decisions, and to choose between alternatives.  He is distinguished from animals by his freedom to do evil or to do good and to walk the high road of beauty or tread the low road of ugly degeneracy. — Rev. Martin Luther King, Jr.

So another Oil Rig has exploded off the Louisiana coast.  According to the latest TV reports all 13 workers are safe, though at least one is injured.

What makes this funny in that sad ironic sense is that not only did Judge Martin Feldman, the severely conflicted by his Oil Industry investments guy who blocked the Obama Adminitration’s initial deepwater drilling moratorium, just blocked the second one; but only yesterday Mariner Energy, the company running the rig, and its parent company Apache, which is purchasing BP’s Gulf assets to help BP meet its liability for the Deepwater Horizon disaster, staged a protest in Houston over the moratorium.

Good thing we have all those oil eating bacteria.  I’m sure 75% of it will be gone in no time.

Unfortunately, as dday observes-

With the White House’s commission on oil spills wavering in the direction of lifting the moratorium, and the head of the Bureau of Ocean Energy hinting at the same thing, and now this tangle in the courts, I don’t think you’re going to see much more of a fight.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

E.J. Dionne Jr: A speech’s tall order

By insisting Tuesday evening that “it’s time to turn the page,” President Obama was talking about more than the Iraq war, and doing much more than reviving one of his most effective slogans from the 2008 campaign.

He was also trying to turn the page on a period in which he has found himself on the defensive, his party in a perilous position for November’s elections and his reputation for political mastery in doubt.

Obama’s Oval Office speech was resolutely nonpolitical in form but profoundly political in its implications. To rescue his party, Obama had to begin rebuilding his popularity, offer hope in a time of economic despair and restore confidence in the course on which he has set the nation.

Joan Walsh: Bush, Beck and Hagee

The president praises Bush, the media find Beck in bed with a Catholic hater, and deficits become the new WMD

A big news day. I found President Obama’s Iraq speech dispiriting. He deserves credit for withdrawing combat troops when he said he would, but our entanglement there is by no means over, and the growing role of private contractors in every realm of our involvement — including some form of what most people would consider combat — makes it hard to feel like things have fundamentally changed.

I was surprised, but I shouldn’t have been, by Obama’s kind words for his predecessor, George W. Bush. I didn’t expect Obama to excoriate the neocon chickenhawks who lied us into war, but I wasn’t entirely prepared for his praising the president who got us into this mess. But he did:

   It’s well known that he and I disagreed about the war from its outset. Yet no one could doubt President Bush’s support for our troops, or his love of country and commitment to our security. As I have said, there were patriots who supported this war, and patriots who opposed it.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

September 2 is the 245th day of the year (246th in leap years) in the Gregorian calendar. There are 120 days remaining until the end of the year.

On this day in 1969, America’s first automatic teller machine (ATM) makes its public debut, dispensing cash to customers at Chemical Bank in Rockville Center, New York. ATMs went on to revolutionize the banking industry, eliminating the need to visit a bank to conduct basic financial transactions. By the 1980s, these money machines had become widely popular and handled many of the functions previously performed by human tellers, such as check deposits and money transfers between accounts. Today, ATMs are as indispensable to most people as cell phones and e-mail.

Several inventors worked on early versions of a cash-dispensing machine, but Don Wetzel, an executive at Docutel, a Dallas company that developed automated baggage-handling equipment, is generally credited as coming up with the idea for the modern ATM. Wetzel reportedly conceived of the concept while waiting on line at a bank. The ATM that debuted in New York in 1969 was only able to give out cash, but in 1971, an ATM that could handle multiple functions, including providing customers’ account balances, was introduced.

ATMs eventually expanded beyond the confines of banks and today can be found everywhere from gas stations to convenience stores to cruise ships. There is even an ATM at McMurdo Station in Antarctica. Non-banks lease the machines (so-called “off premise” ATMs) or own them outright.