Tuesday, April 30, 2013

WHY I LOVE THE INTERNET: 14 Hairless Cats That Look Like Vladimir Putin - By Elizabeth F. Ralph | Foreign Policy

SPAIN: El Celler de Can Roca Ousts Noma as World’s Best Restaurant.

Monday, April 29, 2013

YES, it turns out that money does buy happiness: a Brookings paper proves it. Duh.

GOOD GRIEF: Santander chief Alfredo Sáenz resigns.

One of Europe's most powerful bankers, the Santander chief executive, Alfredo Sáenz, has resigned after a long-running row about whether he should be banned from heading the eurozone's largest bank.

The shock replacement of 70-year-old Sáenz by internal candidate Javier Marín comes just two weeks after the Bank of Spain ordered a review into whether or not he would meet new rules governing bank executives with criminal convictions. Sáenz was convicted in 2009, and handed a three-month suspended jail sentence, for deliberately making false allegations against four businessman who owed money to his previous bank, Banesto.

The businessmen were remanded in jail in 1993, but later proved their innocence. Sixteen years later they won a case against Sáenz. Under Spain's banking rules at the time, the sentence automatically meant he would have been declared unfit to run a bank as soon as the appeal process ran out.

The bastard --yes, I know this is not neutral language, but I'm partial on this: I know the people who were sent to prison for a while, being innocent, because of him-- is walking with a €88m pension, though. It's him who should have gone to the slam.

RELAX, since it's not in the US Europeans won't complain: Gaza schoolboys being trained to use Kalashnikovs.


Germany’s Bundesbank has issued a devastating attack on the bond rescue policies of the European Central Bank, rendering the eurozone’s key crisis measure almost unworkable.

The hardline central bank - known as the temple of monetary orthodoxy - told Germany’s top court that the ECB’s pledge to shore up Italian and Spanish debt entails huge risks and violates fundamental principles. “It is not the duty of the ECB to rescue states in crisis,” it wrote in a 29-page document leaked to Handelsblatt.

The Bundesbank unleashed a point by point assault on every claim made by ECB chief Mario Draghi to justify emergency rescue policies - or Outright Monetary Transactions (OMT) - unveiled last summer to stop Spain’s debt crisis spiralling out of control.

The Draghi plan mobilized the ECB as lender of last resort and led to a spectacular fall in borrowing costs across the EMU periphery, buying nine months of financial calm. The credibility of the pledge rests entirely on German consent. Analysts say the crisis could erupt again at any moment if that is called into question.

“The report borders on economic warfare,” said Harvinder Sian from RBS. “We think there is going to be fear and dread in the market that the court will reject OMT.”

The document said OMT entails the purchase of “bad bonds”, violates ECB independence and entails a high risk of heavy losses in the “not unlikely” event that debtor states are forced out of EMU.

SIMON NIXON at the WSJ looks back to see whether there are any alternatives to austerity.

AS LONG AS they're not reading the tea leaves...

What would you do if you went for a job, and the HR person said one of the criteria for selection was a favourable analysis of your handwriting?

In most of the world, the use of graphology in recruitment is marginal. But in France - despite an appreciable decline of writing in recent years thanks to computers - the technique is proving remarkably resilient.

Reliable figures are hard to come by. Graphologists themselves say that between 50% and 75% of companies make some use of hand-writing analysis, even if it is only occasional.

DO GOOGLE SEARCHES predict market moves?
The volume of Google searches for finance-related terms may predict moves in markets, research suggests.

As the search volume on generic terms such as "debt", "portfolio" and "stocks" fell, the Dow Jones average tended to go up - and vice versa.

Thursday, April 25, 2013

THE SAD LONG STORY of Fisker Automotive, ‘the largest VC-backed debacle in U.S. history’. And government-backed, it should be pointed out.

VERY BAD JOB NUMBERS from the survey for the first quarter in Spain:
More than six million Spaniards were out of work in the first quarter of this year, raising the jobless rate in the euro zone's fourth biggest economy to 27.2 percent, the highest since records began in the 1970s.

The huge sums poured into the global financial system by major central banks have eased bond market pressure on Spain, but the cuts Madrid has made in spending to regain investors' confidence have left it deep in recession.

Unemployment - 6.2 million in the first quarter - has been rising for seven quarters and the latest numbers will fuel a growing debate on whether to ease off on the budget austerity which has dominated Europe's response to the debt crisis.
Not to deny the extreme seriousness of the problem, but it's important to state that this isn't a new phenomenon, it's only a little more exacerbated because the general situation is worse. But unemployment in Spain has consistently been higher that in similar countries, and that's basically because of the rigidity of the labor market. Most labor laws still stem from the paternalistic system instated by Franco, who bought social peace by making jobs extremely stable by decree. Amazingly, it's been more than three decades since he's gone but no government has changed that, not even the supposedly pro-market cabinets led by Aznar or Rajoy. You'll see a big dip in the early 2000s, but that's basically because it was the bubble era. Even then, with 9-10% unemployment, that was about twice other countries. It just "didn't matter" because the economic activity was frantic back then.

But it you take a look at this chart showing unemployment since 1976 until today, you'll see what I mean (click to enlarge)

Wednesday, April 24, 2013

€500 BANK NOTES, the Eurozone savior?

Gangsters, drug dealers and money launderers appear to be playing their part in helping shore up the financial stability of the euro zone.

That's thanks to their demand, according to European authorities, for high-denomination euro bank notes, in particular the €200 and €500 bills. The European Central Bank issues these notes for a hefty profit that is welcome at a time when its response to the financial crisis has called its financial strength into question.

The high-value bills are increasingly "making the euro the currency of choice for underground and black economies, and for all those who value anonymity in their financial transactions and investments," wrote Willem Buiter, chief economist at Citigroup, in a recent research report. The business of issuing euro notes, produced at almost zero cost, is "wildly profitable" for the ECB, Mr. Buiter wrote.

[...] The profit a central bank gains from issuing currency—as well as from other privileges of a central bank, such as being able to demand no-cost or low-cost deposits from banks—is known as seigniorage. It normally accrues to national treasuries once the central banks account for their own costs.

[...] The ECB has taken hundreds of billions of euros of assets of unknown quality on to its balance sheet as it has reacted to the global financial crisis.

It holds more than €600 billion in collateral from banks to which it has made loans, and more than €400 billion in securities it holds outright, including government bonds.

Overall, the ECB's balance sheet has grown to almost €2 trillion. It has a capital base of €78 billion. That creates leverage that makes it look like a "hedge fund on steroids," Mr. Buiter wrote. It wouldn't need to lose much on these assets to wipe out its thin cushion of capital.

That's where seigniorage comes in.

In recent years, the profits on its issue of new paper currency have been running at €50 billion. In 2008, the year of the Lehman Brothers crisis, it was €80 billion.

Even with conservative assumptions about future growth of currency in circulation—at, say, 4% a year, which is in line with the ECB's 2% inflation target plus a margin for economic growth—Mr. Buiter estimates future seigniorage profits for the central bank between €2 trillion and €6.9 trillion.

Thanks to seigniorage, he says, the ECB is "super solvent."


Picture this: quite possibly the most important street photographer of the 20th century was a 1950s children’s nanny who kept herself to herself and never showed a single one of her photographs to anyone. Decades later in 2007, a Chicago real estate agent and historical hobbyist, John Maloof purchased a box of never-seen, never-developed film negatives of an unknown ‘amateur’ photographer for $380 at his local auction house.

There's a few of the pictures at the link.

25 PICTURES you need to look twice to realize what's going on.


JOHN PHELAN in defense of Reinhart and Rogoff:

In truth the idea that there was an Iron Law such that an economy would shrink as soon as it’s government debt hit 90 percent of GDP, the ‘strong form’ of Reinhart and Rogoff (pushed more by the political practitioners than them it ought to be said), was always iffy. It smacks of the sort of bogus causation derived from correlation which is the basis for much modern macroeconomics.

There are, for example, different types of debt. Advocates of higher spending often point to the 260 percent of GDP the British government owed in 1816, the 180 percent it owed in 1919, or the 220 percent it owed in 1945. This, they tell you, proves that Britain’s economy can bear an even greater burden of debt than the 70 percent of GDP it has doubled to in the last five years.

But you don’t have to be David Starkey to know that in 1816, 1919, and 1945 Britain had run up that debt to pay the cost of defeating a tyrant and as soon as that was done we stopped. It was an expense we had to meet and defray over time, the wartime borrowing was classic ‘consumption smoothing’.

To put it another way, when the British government started spending heavily in 1792, 1914, or 1939 there was a definite endgame for this spending: the restoration of the Bourbon monarchy, the defeat of the Kaiser, the overthrow of Hitler. The very moment those goals were accomplished spending would fall rapidly.

Our current level of government spending, by contrast, is not being undertaken to safeguard this country and its neighbours from conquest but to maintain a public sector and welfare state grown fat on borrowing and tax revenue from an unsustainable bubble in the absence of that bubble and those tax revenues. We are not smoothing consumption, we are sucking it out of tomorrow. And, unlike Pitt the Younger, Herbert Asquith, or Neville Chamberlain, present day advocates of higher spending cannot give an endgame for their proposed accrual of debt.
The point of this for evaluating Reinhart and Rogoff’s work is to note that one load of debt is not necessarily the same as another. There ought to be a little nuance to the picture, there are no magic numbers.

[...] despite what some excitable commentators have proclaimed, Herndon, Ash, and Pollin have not found no correlation between high debt and low growth. They have found a weaker one than Reinhart and Rogoff in 2010 and about the same as they found in 2012, but they have still found one.
As page 21 of their paper states: if debt is below 30 percent GDP growth comes in at 4.2 percent, if debt is between 30 percent and 60 percent of GDP growth comes in at 3.1 percent, if debt is between 60 percent and 90 percent of GDP growth comes in at 3.2 percent, and if debt is over 90 percent of GDP growth comes in at 2.2 percent. Even on Herndon, Ash, and Pollin’s figures higher debt is correlated with lower GDP growth.

Tuesday, April 23, 2013

SPANISH POLICE detain Al-Qaeda terror suspects:

Spanish police on Tuesday arrested two "suspected terrorists" believed to be linked to Al-Qaeda in the Islamic Maghreb, Spain's interior ministry said.

ON THE WSJ: Spain Is Still on the Brink of Junk.

Monday, April 22, 2013

MIDNIGHT BARCELONA: stunning timelapse video of the city at night. Don't miss it.

MIDNIGHT BARCELONA from Pau García Laita on Vimeo.

WE'RE LEADERS! "Spain’s budget deficit was the largest in the European Union last year, underlining the challenge faced by Prime Minister Mariano Rajoy as he is due to present a new plan to foster a recovery."

'MAD MEN' and American liberalism in 1968.

WHISTLEBLOWER HERVÉ FALCIANI: “The US told me that my life was in danger and that Spain would be safe

Thursday, April 18, 2013

WELCOME TO THE FUTURE: Self-Driving Cars Mainstream by 2025. I could insert here something about this being good news for women, but I won't.


Wednesday, April 17, 2013

WELL DESERVED: "Spain Dismisses Boston Consul for Breach of Duty After Blasts". The guy had the gall to close the consulate at the regular hour , just like in a normal day.


Saturday, April 13, 2013

WHAT IF we all died exactly the day we turn 40?

Thursday, April 11, 2013

A SINGLE ANDROID PHONE can hack an entire passenger plane... The only comforting thought is that the hacker would also be flying in it. Although, com think of it, he could be a Jihadist...

Monday, April 08, 2013


"THIS IS A GOLDEN AGE OF GLOBAL GROWTH (yes, you read that right)":
Convergence occurs when a country’s rate of economic growth per head exceeds that of the typical advanced country, say the US. Between 1960 and 2000, the US grew at about 2.5 per cent. About 20 poor countries (excluding oil exporters and small countries) grew faster than the US by 1.5 per cent on average, among them remarkable growth stories such as Japan, Korea, Singapore, China and India.
About a decade before the global crisis struck, a shift occurred. Eighty countries – four times as many as in the previous period, located in sub-Saharan Africa and Latin America as well as Asia – started catching up with US living standards. Their growth exceeded that of the US on average by nearly 3.25 per cent, implying that this broader group was catching up twice as fast as did countries following the second world war. Put simply, prosperity was spreading across the globe, and at an accelerating pace.
The implications are enormous. For example, if this pace continues, sub-Saharan Africa – and, indeed, 80 per cent of all countries – could in 50 years be in a situation comparable to that of Chile today.
Did the subprime and eurozone crises set back this process? Between 2008 and 2012, developing countries’ growth did decelerate in absolute terms, from about 4.5 per cent to about 3 per cent. But the pace at which they were catching up with rich ones did not slow significantly.
This chart is telling (click to enlarge):