Wednesday, November 12, 2014

P*ss off says China



We have yet another climate fudge where a sensible leader manages to tell a silly leader to p*ss off without the BBC noticing.

China and the US have unveiled new pledges on greenhouse gas emissions, as the leaders of the two countries met for talks in Beijing.

US President Barack Obama said the move was "historic", as he set a new goal of reducing US levels between 26%-28% by 2025, compared with 2005 levels.

China did not set a specific target, but said emissions would peak by 2030.

Wednesday's pledge is the first time it has agreed to set a ceiling, albeit an undefined one, on overall emissions.


An undefined ceiling eh? Hmm... let's see... is that similar to no ceiling?

I think it is.

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Tuesday, November 11, 2014

Comic books ARE real life

"All art constantly aspires towards the condition of music," said Walter Pater; but all life aspires to the condition of comic books.

When I put away childish things, I foolishly put away the Daleks, Brainiac, the Joker, Ming the Merciless... They are real, and so is our battle against them. It's the losers, hampered by empathy, versus the worldly winners who lack it. The victory is in the resisting. As James Michie said:

Now I look at the war as a sportsman. It's a matter of choosing
The decentest way of losing.
Heads or tails, losers or winners,
We all lose, we're all damned sinners.
And I'd rather be with the poor cold people at the wall that's shot
Than the bloody guilty devils in the firing-line, in Hell and keeping hot.'



(Pic source)


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Monday, November 10, 2014

Catalonia: a case to answer

2.25 million Catalans voted in an independence "opinion poll" yesterday, and over 80% said both yes to becoming an autonomous state, and yes to being fully sovereign (breaking from Spain altogether).

That makes about 1.8 million for secession, out of a total of 5.4 million registered voters living in Catalonia. A third of all voters.

A 42% turnout is impressive, bearing in mind this was an unofficial poll organised by 40,000 volunteers - the UK's 2005 General Election turnout was only 61%.

But even if absolutely everyone voted in an official Catalonian referendum and two-thirds said no, that would still leave a deep division. I can't see that sticking your fingers in your ears is a viable strategy for Madrid.

Devo max for Catalonia?


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Sunday, November 09, 2014

Equity collapse: two views make a market

John Hussman thinks the stockmarket is due for at least a 50% drop. If he's right, that would be the third time since the start of the year 2000 (lows in 2003 and 2009).



On the other hand, Barry Ritholtz shows that the S&P 500 has (with a blip or two including 1929-1933) shown a rising tendency since the year 1900.

As to the latter, I'd like to see:

(a) a correlation with some reasonably fair measure of inflation (can of worms, no doubt); and
(b) a correlation with the discovery and exploitation of fossil fuels

Will it keep up? Who knows? As Keynes said, in the long run we're all dead. I guess we should enjoy the unique era of mass wealth and comfort (in the West, for most, relative to past ages) while it lasts, however long it does.

But - speaking for myself only - I wouldn't put all my eggs in one basket, and certainly not on the stockmarket at these QE/HFT/derivative-pumped valuations.

(Pic source)

Your view may be different - and the correct one.


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Spanish sovereign debt and JPM

James Higham writes (also on Orphans of Liberty):

A couple of money men I know said, in 2010, that the big issue at that time was sovereign debt and China is cited as one of the main players.

I wrote years ago about Peabody and how there was an induced grain crisis in America in the mid-1800s, out of which the eventual JPM did very well indeed and JPM is a topic upon which many on left and right do agree.

Our site’s JD wrote to someone who knows money, asking:

I don’t understand money as I wrote a few years ago here-
http://www.nourishingobscurity.com/2012/01/money/
But I was reading this today-

http://www.elmundo.es/economia/2014/11/07/545bf1f2268e3e634d8b4586.html

I can’t find any English report on this so far but it looks as though JPM are telling their clients not to buy Spanish debt. (I have never understood how or why anyone would want to ‘buy’ a debt, presumably these are the famous ‘junk bonds’ which were at the root of the recent financial problems?)

Their reasoning is that were Podemos to reach a position of power in Spain then a lot of the debt would be cancelled. Podemos are preparing an audit which will decide which debts are legitimate and which are not and the latter will be written off.

JPM in their analysis also consider the bizarre situation that PP(right wing) and PSOE(left wing) could form a coalition after the next election to prevent Podemos forming a government. I have seen elsewhere that polls suggest that if an election were called tomorrow Podemos would win!

So my question is – what are the implications of a Debt Jubilee, the Biblical idea that all debts should be written off after seven years? (Not just in Spain but everywhere) And who would lose by such a Debt Jubilee? Not me for sure, I have no debts. Rarely use a credit card and pay cash for whatever I need.

A commenter, The Hickory Wind, who lives in Spain, stepped in to observe:

I’m late to the party as usual, but anyway…

Simon Harris’s original piece is interesting and informative to anyone who doesn’t know much about Spanish politics, but those who do will recognise that he has swallowed uncritically a bit too much of the propaganda. There were two points I would have made to him, but the second annoyed me so much that I didn’t bother.

Firstly, the historical case has very little to do with the modern politcal reality, or with the justice of the cause. Even if the history is properly understood and correctly interpreted, what once was can tell you little about what should be now. It’s not that he does it badly, just that it isn’t particularly relevant.

The second point, the one that made me switch off, was when he described the Popular Party as extreme right. This sis a serious falsehood for someone who is claiming to inform a distant public of an important local matter, and he must surely know that it is false. The PP is partially and indirected descended from some remnants of the old Falange, in much the same way that the Socialist party is descended from a Trotskyist Socialist Workers party (they still have it in their name), but one is mainstream centre right and the other centre left, and they have been throughout their periods of government in democracy. For someone who claims to be an experienced commentator on Catalan affairs to suggest otherwise is little short of a direct lie.

I enjoyed your reply, but you underestimate the historical strength of Catalan identity, although it is true that it has been deliberately whipped up in recent years by politicians who used it to gain a power base, and have now painted themselves into a corner. It is only partly based on language. There is also a sense of a different historical path, which is not entirely correct, but identity is not about truth, and a sense that many of the other regions of Spain (especially Galicia, Extremadura and Andalucia, are completely foreign to them, in their people and their culture, as well as their history.

Incidentally you are wrong to dismiss the Catalan language as just a dialect of Spanish. Although it is easy enough for a Spanish speaker to understand and to learn, it belongs to the Gallic family of Romance languages, which split from the Iberian group 1,000 years ago, and it has a rich literature and tradition of its own dating back to the middle ages. Anecdotally, some of the books that inspired Don Quijote’s madness were Occitan tales of chivalry, still extant.

I think I have droned on enough now, so thank you for your patience

Which gets away a bit on the question of Spanish debt itself but sets the overall scene and on that basis, its inclusion here is argued. Thus, the other party in this collusion of three bloggers, Sackerson, had this piece up at his place, about corruption in Spain, which still does not get us any closer to the issue of JPM’s advice.

This reply from Sackerson is in no way personal advice but touches on the general world situation as he sees it:

There are, I understand, hedge funds speculating in sovereign debt. There’s a City adage “two views make a market” and if they can buy bonds cheaply and guess right then they make a fortune if the government honours its obligation – I understand buying British bonds during and after Waterloo was the foundation of the British Rothschild fortune.

One twist I read about recently was a fund buying sovereign debt that was to be defaulted (partly or wholly) and then using international law to enforce it in full. We are in a time when the rich are making law to suit themselves.

Of course, the speculators could be wrong, but if you’ve previously made a personal fortune in bonuses who cares if the firm goes down? This appears to be the story of the banks.

Goldman Sachs were caught some time ago giving advice one way to their smaller investors and the other way to large and favoured clients. I stopped reading the financial press when none of them foresaw the great financial crisis.

The world is interlinked with finance, debt and speculation. The total value of derivatives – side bets to you and me – appears to dwarf the GDP of the world:

http://en.wikipedia.org/wiki/Derivative_(finance)#Size_of_market

I am no longer sure what money actually represents, since it’s backed and limited by nothing at all.

The point has been made – by Australian economist Steve Keen, among others – that instead of bailing out banks, the money should have been given to the people to bail them out, because with less debt they would spend more and create jobs for each other.

A debt jubilee sounds great; except that pensions use government bonds to shore up their guarantees to pensioners. And what would happen to house prices if, say there were no mortgages any more? It’s like trying to predict the outcome of a massive barroom fight.

I found this from JPM to its private clients [pdf]

… which seems to confirm that advice JD read that they gave.

Pause for a moment and note that we are divided by language so much. For example, on the Amanda Knox issue, the reason America believed one thing was that their sources were all from one camp, in the English language. However, those reading italian had an entirely different view. Ditto with the bin Laden SEAL killing. Those reading Arabic have an entirely different view to those reading only English.

There’s a piece of advice in that – to really know what’s going on, accepting that the MSM globally is in captcha, to know other languages or to access machine translations is most helpful. Going to a Spanish blogger on these things and getting a machine translation does often given a different perspective.

The major financial press is not all that helpful. Bloomberg reports that Black Rock is buying Spanish short-term [early October, 2014] but that still doesn’t touch on sovereign debt.

Why should JPM advise that way when S&P had advised that it wasn’t all that bad, Spain’s sovereign debt as an investment, in May, 2014?

Not sure this Spanish govt advice is helpful. Nor this.

Perhaps this will help:

The European Central Bank bought covered bonds for the first time since President Mario Draghi unveiled an asset purchase program last month.

The ECB acquired short-dated French notes from Societe Generale SA (GLE) and BNP Paribas SA as well as Spanish securities from other lenders, according to two people familiar with the matter who asked not to be identified because the information is private. Draghi said he intends to expand the bank’s balance sheet by as much as 1 trillion euros ($1.3 trillion) to stave off deflation in the euro area.

Policy makers are under pressure to take action as euro-area inflation slowed to 0.3 percent in September and the International Monetary Fund said the region has as much as a 40 percent chance of entering its third recession since 2008. Growth will reach 1.3 percent next year, slower than he 1.5 percent pace predicted in July, after a 0.8 percent gain this year, the IMF said Oct. 7.

“From today we will begin to know how aggressive the ECB will be in bidding for bonds,” said Agustin Martin, head of European credit research at Banco Bilbao Vizcaya Argentaria SA in London.

It’s blindingly obvious I’m no money man but am, I think, a reasonable political thinker. Podemos represents a cry for help from the Spanish and may be behind the Catalan call of ‘let’s get out of this mess now’. Whether their leadership has been promised funding upon Spanish break-up [don't forget the Muslim push into Spain as well, history revisited] is an unknown.

Podemos is left wing academic intellectual. As such, it is ignorant and it’s only solution is to nationalize. Not playing by the international money rules does seem attractive to many Spaniards – see their polls and is the leftwing alternative to what Nigel is doing over here.

The difference is that things still have to be financed over there, even nationalized, e.g. public sector salaries and a wildly freefall Spanish currency is not going to help with that – at least such a thing has not helped before [see Russia 1997/8, through which I lived in that country].

Nigel’s solution is to stay within capitalism but trade with other countries free of the EU toxicity. And the notion that Europe would cease trading with the UK is not borne out by stats on inwards and outwards movement of money – the UK is still attractive as an investment. Only the unelected “leadership” of the EU is trying to talk up the opposite.

Therefore, in the light of Podemos and the possibility of nationalization, JPM is ambivalent but cautious. Most major players say go short for now and see what happens.

Which still doesn’t answer the question of who owns Spain or will in the near future.
 

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Catalonia votes today!

The forcedly unofficial quasi-referendum on Catalonia's independence is due today (unless the Spanish government has found a way to stop it).

For background, see Simon Harris' piece here.


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Saturday, November 08, 2014

Save The News Quiz!

I am about to try listening to Radio 4's The News Quiz yet again - the triumph of hope over expectation, will I never learn? I'd be more sympathetic to some of the PC opinions if there was even the semblance of an alternative and the audience didn't appear to be composed of sycophants.

Will the celeb selection change if Labour is spannered at the next General Election, or if it romps home with a landslide majority?

What political earthquake would it take to have someone like the late Alan Coren on the panel? What wouldn't I give to hear the Sage of Cricklewood again, and to have a proper belly-laugh?


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