03/12/2015 archive

So yesterday the DJI took a 300 point tumble as the European Central Bank instituted Quantitative Easing.  What is that and why is it unhelpful at best.

Quantitative Easing is a monitary policy to create liquidity when interest rates are already at zero.  The Central Bank redeems it’s old bonds at face value and issues new ones reflecting the zero interest environment.

Now there’s already a mechanism to do that called a Bond Market where you can take your paper and sell it to someone else at the current interest rate BUT you have to do so at a discount to face value to reflect the current interest.  A trivial example-

If the interest rate is 10% over 10 years you can buy a bond from the Central Bank for $900 that has a face value of $1000 redeemable in 10 years.  Now during that 10 years you get nothing, at the end you get $1000.

If you need the money now (liquidity), you go to the Bond Market and sell your bond at the going rate which has several complicating factors like the current interest rate and the date the bond comes due but is less than the face value promised if you hold the bond until it is paid (discount).

Quantitative Easing pays you face value now.  Whether this is a good deal for the Central Bank (and it almost never is because that’s not the point) depends on the amount of time between now and when the bond comes due and what interest rates are (if interest rates rise steeply and there is a lot of time between now and when the bonds are due it’s a good deal for the Central Bank).

So what is the point?  Central Bank bonds are mostly held by regular Banks who are required to hold a certain amount of assets in the form of these bonds.  The Banks cash out their Central Bank bonds, buy zero interest Central Bank bonds and pocket the difference.  In other words, just another bailout disguised with accounting tricks.

This is thought by Keynesians who think this new influx of money will be put to productive economic use to be slightly stimulative.  It’s thought by Modern Monitarists to be meaningless and by Austerians a debasement of the currency.

In fact most of the money simply goes into the pockets of Banks, the Billionaires, or gets wiped out in speculative bubbles like… oh, say the Stock Market.

So what we have here is a policy that might make a minimal amount of sense if there were a demand for productive use but will really only be used to make our insolvent Banks seem more solvent when they are in fact bankrupt.

This will become very apparent in Germany and throughout the Euro-Zone after Greece, Spain, Italy, and France repudiate their Euro debts and return to their own devalued (but for who?  Banks and bond holders, that’s who) currency.

Transcript

Transcript

Michael Hudson is a Research Professor of Economics at the University of Missouri, Kansas City.

Ferguson police chief Thomas Jackson to resign

by Jon Swaine, The Guardian

Wednesday 11 March 2015 16.16 EDT

The embattled police chief of Ferguson, Missouri, is to resign a week after his department was accused of racial bias in a scathing report by the US government, an aide to the St Louis county executive told the Guardian on Wednesday.

…

The resignation of Jackson has long been anticipated after he was heavily criticised for his handling of the furore over a white police officer’s fatal shooting of a black 18-year-old in Ferguson last year.

Residents were appalled that Jackson’s officers left the body of Michael Brown lying for more than four hours in the residential side-street where he had been shot dead by Darren Wilson on 9 August. Successive nights of protests followed Brown’s death.

…

The resignation was welcomed by protest groups and lawmakers critical of Jackson’s leadership. “This is long overdue,” said Antonio French, a St Louis alderman. “There were grounds to fire or ask for the resignation of Chief Jackson months ago.

“But the details in the Department of Justice’s report of how his department operated meant there was no way for him to remain in that position if the city is to move forward”.

…

Jackson, 58, is the sixth senior Ferguson official to lose his job since the Department of Justice last week sharply criticised the city’s criminal justice system. Investigators concluded that police and court authorities targeted black people disproportionately and frequently violated their constitutional rights.

John Shaw, the city manager, was removed from his job on Tuesday evening. His departure followed the resignation of municipal court judge Ronald J Brockmeyer, Brockmeyer’s court clerk, and two of Jackson’s senior commanders.

Jackson presided over a police force that was 94% white in a St Louis suburb whose population is two-thirds black. African American residents reported feeling badly alienated from the officers who aggressively policed their driving and daily lives. The Justice Department’s report blamed the community disintegration on the city’s aggressive policy of raising revenue through small court fines.

The police chief was named along with Shaw and Brockmeyer as one of the driving forces behind the revenue-generation policy.

Investigators found an email from Jackson to Shaw in March 2011 reporting that court revenue in the previous month was $179,862.50, which “beat our next biggest month in the last four years by over $17,000.” The city manager replied: “Wonderful!”

Racist emails unearthed by the federal investigators prompted the resignations of veteran officers Sergeant William Mudd and Captain Rick Henke, who was effectively Jackson’s second-in-command, and the firing of Mary Ann Twitty, the city’s court clerk.

“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.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

Joshua Kopstein: Washington’s cybersecurity is about surveillance, not security

Congress’ latest legislative attempt promises protection, but it would just let the government spy more easily on us

The term “cybersecurity” has long been a comically ubiquitous utterance in Washington. But recent proposals from Congress, the White House and the intelligence community are straining the word’s meaning to dubious ends.

For most Americans, cybersecurity is the protection we desperately need in response to the dwindling separation between our physical and digital lives. Two-thirds of Americans now carry pocket-size computers full of intimate data that are connected to the Internet at all times, and cars, refrigerators and thermostats are not far behind. After a year of high-profile hacks – from the crippling compromise of Sony Pictures to major intrusions at Target, Home Depot and most recently the health insurance giant Anthem – who would say no to cybersecurity?

But D.C.’s cybersecurity rhetoric is a political smokescreen. Though based on real threats, its purpose is to rally support for sweeping policies such as the Cyber Information Sharing Act (CISA), Congress’ latest attempt at cybersecurity legislation, that merely enable more surveillance.

New York Times Editorial: Republican Idiocy on Iran

After helping to ignite a firestorm over a possible nuclear agreement with Iran, Senator John McCain, a former Republican presidential candidate, is now sort of acknowledging his error. “Maybe that wasn’t exactly the best way to do that,” he said on Fox News on Tuesday.

He was referring to the disgraceful and irresponsible letter that he and 46 Senate colleagues sent to Iran’s leaders this week that generated outrage from Democrats and even some conservatives. [..]

Maybe Mr. McCain, who is chairman of the Senate Armed Services Committee, should have thought about the consequences before he signed the letter, which was drafted by Tom Cotton, a Republican of Arkansas, a junior senator with no foreign policy credentials. Instead of trying to be leaders and statesmen, the Republicans in Congress seem to think their role is outside the American government, divorced from constitutional principles, tradition and the security interests of the American people.

The Guardian

So it’s 4 years on now from the Fukushima disaster.  What do we know?

Well we know a little bit more about the extent of the damage.  There are 6 reactors at Fukushima Daichi only 3 of which were in operation at the time, but all of which are involved.  You don’t hear much about reactors 5 and 6 which were off line, but the reason they were off line is they were experiencing cooling problems.  They sit today fueled, hot, closely monitored but unapproachable due to the high levels of radiation, slated for decommissioning.

Unit 4 was in a similar stand down.  What makes it unique is that it still experienced massive damage from a hydrogen explosion and the bulk of its nuclear fuel was stored in a pool on it’s roof.

The good news is that all 1533 fuel rods have been removed as of just this last December, the bad news is that the ground is subsiding underneath it and the building is in danger of collapse.  Even without the fuel the structure is still highly radioactive in operating areas and thoroughly contaminated by fallout.

All of the active reactors, 1, 2, and 3 experienced both hydrogen explosions and core meltdowns which almost certainly in the case of Unit 1 and probably in all of them has breached every level of containment and is sitting partially buried in plain old soil.

The salt water used as an emergency measure during the early stages of the disaster has corroded and ruined almost every installed control system and massive amounts of water continue to be pumped to this day to contain the reaction.  This highly radioactive water is stored in big steel tanks (think Power Plant size) that are starting to rust and leak.  There is no plan for how to dispose of it.

Speaking of radioactive water, it leaks out of the big holes in the bottom of the reactor containment units into the ground and natural ground water continues to flow through the site to the sea in a large and permanent plume.  All efforts, including the much vaunted ‘ice dam’ created by freezing the dirt around the site have been an utter failure.

There doesn’t seem to be a Plan B.

Speaking of radiation, in most critical areas it remains high enough that even specially hardened electronics fail within hours, humans would die in days from exposure.  Even in outlying areas of the 30 km exclusion zone workers can receive a lifetime dose in weeks or months.  Thyroid cancer (an early indicator) has risen from 2 – 7 cases in a population of 100,000 to over 100 reported in a population of 300,000 so far.

Does that seem gloomy enough?

TEPCO (a zombie company, effectively bankrupt) and the Japanese Government continue to delay, obsfuscate, and minimize the impact of this event.  Independent science is actively discouraged in favor of happy fun time propoganda.  The Japanese Government, which is paying Billions for fossil fuels to maintain energy capacity, is actively pushing for the resumption of nuclear power production and the re-activation of the remaining 40+ plants despite the fact that they are no safer than they ever were.

In the mean time Solar is getting cheaper and better than ever to the point where it is price competitive with Oil even at $50 a Barrel.

Remember, it’s safe, clean, AND makes you glow in the dark so it’s easy to find your way to the bathroom at night!

The law that entropy always increases holds, I think, the supreme position among the laws of Nature. If someone points out to you that your pet theory of the universe is in disagreement with Maxwell’s equations – then so much the worse for Maxwell’s equations. If it is found to be contradicted by observation – well, these experimentalists do bungle things sometimes. But if your theory is found to be against the second law of thermodynamics I can give you no hope; there is nothing for it but to collapse in deepest humiliation.

–Sir Arthur Stanley Eddington, The Nature of the Physical World (1927)

Science News and Blogs

• Gamma Rays May Be Clue on Dark Matter, By DENNIS OVERBYE, The New York Times
• Nine new dwarf galaxies full of dark matter found just chilling around the Milky Way, By Rachel Feltman, Washington Post
• NASA’s Dawn Probe Begins Orbiting Dwarf Planet Ceres, By KENNETH CHANG, The New York Times
• Ancient Mars Had an Ocean, Scientists Say, By MARC KAUFMAN, The New York Time
• Astronomers Watch a Supernova and See Reruns, By DENNIS OVERBYE, The New York Times
• Anthropocene: New dates proposed for the ‘Age of Man’, By Rebecca Morelle, BBC
• Saturn’s moon suggests the question of life beyond Earth may soon be answered, By Terrence McCoy, Washington Post
• Fossil Tells of 520-Million-Year-Old Creature Like a Giant Lobster, By SINDYA N. BHANOO, The New York Times
• Mount Everest’s Poop Situation Is About To Go From Bad To Worse, by Emily Atkin, Think Progress
• Neanderthals Wore Eagle Talons As Jewelry 130,000 Years Ago, by Megan Gannon, Live Science

Science Oriented Video

Obligatories, News and Blogs below.

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

Find the past “On This Day in History” here.

March 12 is the 71st day of the year (72nd in leap years) in the Gregorian calendar. There are 294 days remaining until the end of the year.

On this day in 1947, in a dramatic speech to a joint session of Congress, President Harry S. Truman asks for U.S. assistance for Greece and Turkey to forestall communist domination of the two nations. Historians have often cited Truman’s address, which came to be known as the Truman Doctrine, as the official declaration of the Cold War.

In February 1947, the British government informed the United States that it could no longer furnish the economic and military assistance it had been providing to Greece and Turkey since the end of World War II. The Truman administration believed that both nations were threatened by communism and it jumped at the chance to take a tough stance against the Soviet Union. In Greece, leftist forces had been battling the Greek royal government since the end of World War II. In Turkey, the Soviets were demanding some manner of control over the Dardanelles, territory from which Turkey was able to dominate the strategic waterway from the Black Sea to the Mediterranean.

Truman stated the Doctrine would be “the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.” Truman reasoned, because these “totalitarian regimes” coerced “free peoples,” they represented a threat to international peace and the national security of the United States. Truman made the plea amid the crisis of the Greek Civil War (1946-1949). He argued that if Greece and Turkey did not receive the aid that they urgently needed, they would inevitably fall to communism with grave consequences throughout the region.

The policy won the support of Republicans who controlled Congress and involved sending $400 million in American money, but no military forces, to the region. The effect was to end the Communist threat, and in 1952 both countries joined NATO, a military alliance that guaranteed their protection.

The Doctrine was informally extended to become the basis of American Cold War policy throughout Europe and around the world. It shifted American foreign policy toward the Soviet Union from détente (friendship) to, as George F. Kennan phrased it, a policy of containment of Soviet expansion. Historians often use its announcement to mark the starting date of the Cold War.

Long-term policy and metaphor

The Truman Doctrine underpinned American Cold War policy in Europe and around the world. The doctrine endured because it addressed a broader cultural insecurity regarding modern life in a globalized world. It dealt with Washington’s concern over communism’s domino effect, it enabled a media-sensitive presentation of the doctrine that won bipartisan support, and it mobilized American economic power to modernize and stabilize unstable regions without direct military intervention. It brought nation-building activities and modernization programs to the forefront of foreign policy.

The Truman Doctrine became a metaphor for emergency aid to keep a nation from communist influence. Truman used disease imagery not only to communicate a sense of impending disaster in the spread of communism but also to create a “rhetorical vision” of containing it by extending a protective shield around non-communist countries throughout the world. It echoed the “http://en.wikipedia.org/wiki/Quarantine_Speech quarantine the aggressor]” policy Franklin Delano Roosevelt sought to impose to contain German and Japanese expansion in 1937. The medical metaphor extended beyond the immediate aims of the Truman Doctrine in that the imagery combined with fire and flood imagery evocative of disaster provided the United States with an easy transition to direct military confrontation in later years with communist forces in Korea and Vietnam. By presenting ideological differences in life or death terms, Truman was able to garner support for this communism-containing policy.

Your Racist Update

Tonightly we are talking about banning words.

“Sticks and stones may break my bones, but whips and chains excite me.”  You know, I never let words bother me, but I’m a child of privilege and maybe I don’t experience them the same way.  If I can provoke you to a mass of incoherent rage and name calling, good for me.  That means I win, you got nothing.  Now get your sorry ass back to a dictionary and learn some vocabulary fool.

On the other hand I am sensitive to the fact that other people may have different life experiences so I’m as careful as I can be to avoid inflamatory language.  I may call you a pea brained ignoramous right to your face, but because of your mental deficiencies you probably won’t notice anything other than the sneering tone with which I deliver it.  I rarely curse, and only for effect.

Do you think Twain should be shunned or bowlderized because he uses a certain term that accurately conveys how people thought about the Institution of Race Slavery?  I don’t.  It may surprise you to learn that the initial complaints about the language of Huckleberry Finn didn’t involve that term at all and were instead that Huck spoke the dialect of itinerant Missouri and the Victorian prudes were afraid that children would copy his ‘ghetto grammar’ in admiration of the character and defiance of the proper English of parental authority.

Heaven forfend we should give our kids any freedom.  Next thing you know they’ll be talking street and wearing hoodies and their pants around their ankles.

Banning words never makes the ideas go away.

Continuity

Heffalumps and Woozles

This Week’s Guests-

• Wednesday 3/11: Common
• Thursday 3/12: Rob Corddry

Common is a Chicago rapper, writer, and actor.  In Selma he portrayed civil rights leader James Bevel and co-wrote the Oscar-winning song “Glory”.

The real news below.