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Gene Ellis

Some thoughts on German politics and the saver's tax in Cyprus | Credit Writedowns - 0 views

www.creditwritedowns.com/...-the-savers-tax-in-cyprus.html

shared by Gene Ellis on 18 Mar 13 - No Cached
  • Now, the large 82.8% German government debt to GDP ratio is a source of shame for many because Germany was a driving force in enshrining the 60% government debt to GDP hurdle into the Maastricht Treaty that set out terms for the euro zone.
  • Moreover, the interest rate policy of the ECB, geared as it was to the slow growth core, produced negative real interest rates and credit bubbles in Spain and Ireland during the last decade. German banks piled in to those countries as prospects domestically stagnated.
  • “The average German worker feels like a cash cow being sucked dry by a quick succession of reforms and bailouts that take money out of her pocket. First it was for reunification, then for European integration, then to right the economy, then to bail out German banks, and finally to bail out the European periphery. Fatigue has set in.”
  • ...10 more annotations...
  • The bottom line is that none of the major political parties in Germany are going to vote for bailouts for other euro zone countries unless massive strings are attached, since these bailouts are political losers.
  • The anti-bailout part of the FDP platform is the one part of their rhetoric which could successfully take them over the 5% hurdle. The FDP’s complicity in using German taxpayer money to bail out the so-called profligate periphery is a one-way ticket out of Parliament.
  • “First, the Greek reports come via statements made by Michael Fuchs, CDU deputy Bundestag head and a senior member of German Chancellor Angela Merkel’s party. Fuchs warned earlier today that Germany would veto further aid to Greece if the country has not met the conditions of its previous bailouts.
  • “Second, all along Germany has indicated that it is resistant to increasing funding of the ESM and EFSF bailout facilities. This presents a problem in the case of Spain and Italy because of the size of those economies.
  • Willem Buiter, Chief Economist at Citigroup, has been most vocal in predicting that these facilities will be inadequate when Spain and Italy hit the wall and that more extreme measures will have to be taken.
  • The basic dilemma here is that almost all of the eurozone governments including Germany carry high debt burdens in excess of the Maastricht Treaty. For example, Germany has been in breach of Maastricht Treaty in 8 of 10 years since 2002, has been over the Maastricht 60% hurdle in each of those ten years, and now carries a debt to GDP burden above 80%.
  • The long and short of it was that the Germans had reached the end of their ability to support bailouts.
  • All evidence is that this levy has created panic in Cyprus. After all, what is the use of having a deposit guarantee if government can arbitrarily circumvent it to impose losses on your deposits anyway?
  • One can't just blame Cyprus for this fiasco. The ECB, EC and European Union finance ministers signed off on the insured deposit grab too]
  • My view? It was inevitable that we would be in crisis again. The austerity world view of crisis resolution is completely at odds with the capacity of the euro zone’s institutional architecture to handle a crisis.
Gene Ellis

Robert Samuelson: A dishonest budget debate - The Washington Post - 0 views

www.washingtonpost.com/...2-9f54-f3fdd70acad2_story.html

budget debate washington

shared by Gene Ellis on 18 Mar 13 - No Cached
  • t’s the math: In fiscal 2012, Social Security, Medicare, Medicaid and civil service and military retirement cost $1.7 trillion, about half the budget.
  • As a share of national income, defense spending ($670 billion in 2012) is headed toward its lowest level since 1940.
  • States’ Medicaid costs will increase with the number of aged and disabled, which represent two-thirds of Medicaid spending. All this will force higher taxes or reduce traditional state and local spending on schools, police, roads and parks.
  • ...5 more annotations...
  • Almost everything is being subordinated to protect retirees.
  • “for how long will we continue to sacrifice investments in our nation’s children and youth ... to spend more and more on the aged?”
  • In a Pew poll, 87 percent of respondents favored present or greater Social Security spending; only 10 percent backed cuts. Results were similar for 18 of 19 programs, foreign aid being the exception.
  • an aging America needs a new social compact: one recognizing that longer life expectancies justify gradual increases in Social Security’s and Medicare’s eligibility ages; one accepting that sizable numbers of well-off retirees can afford to pay more for their benefits or receive less; one that improves generational fairness by concentrating help for the elderly more on the needy and poor to lighten the burdens — in higher taxes and fewer public services — on workers; and one that limits health costs.
  • Government is being slowly transformed into a vast old-age home, with everything else devalued and degraded.
Gene Ellis

Monarch Migration Plunges to Lowest Level in Decades - NYTimes.com - 0 views

www.nytimes.com/...o-lowest-level-in-decades.html

monarch migration lowest level decades

shared by Gene Ellis on 14 Mar 13 - No Cached
  • But an equally alarming source of the decline, both Mr. Taylor and Mr. Vidal said, is the explosive increase in American farmland planted in soybean and corn genetically modified to tolerate herbicides. The American Midwest’s corn belt is a critical feeding ground for monarchs, which once found a ready source of milkweed growing between the rows of millions of acres of soybean and corn. But the ubiquitous use of herbicide-tolerant crops has enabled farmers to wipe out the milkweed, and with it much of the butterflies’ food supply.
  • Gene Ellis on 14 Mar 13
     
    unintended consequences of GM crops
Gene Ellis

Suntech Power on Financial Brink - NYTimes.com - 0 views

www.nytimes.com/...-power-on-financial-brink.html

shared by Gene Ellis on 13 Mar 13 - No Cached
  • Suntech announced Tuesday that it was closing its factory in Goodyear, Arizona, at the cost of 43 jobs there. The factory put aluminum frames and electrical junction boxes on solar cells imported from China, so that the fully assembled solar panels would qualify for “Buy American” programs.
  • But China’s approach to renewable energy has proved ruinous, both financially and in terms of trade relations with the United States and the European Union. State-owned banks have provided $18 billion in loans on easy terms to Chinese solar panel manufacturers, financing an increase of more than tenfold in production capacity from 2008 to 2012. This set off a 75 percent drop in panel prices over the same period, which resulted in Chinese companies’ losing as much as $1 for every $3 in sales last year.
  • he United States has responded with tariffs of about 40 percent on solar cells and solar panels from China,
Gene Ellis

The Truth about Fracking - Kevin D. Williamson - National Review Online - 0 views

www.nationalreview.com/...ut-fracking-kevin-d-williamson

shared by Gene Ellis on 22 Jan 13 - No Cached
  • The water makes the fractures, and the sand keeps them open. There’s some other stuff in that fracking blend, too: biocides, for one thing, not very different from what’s in your swimming pool, to keep bacteria and algae and other gunk from growing in the water and clogging up the works. There are also some friction reducers, because water and sand moving at speed can produce a lot of wear and tear (cf. the Grand Canyon), and the occasional jolt of 7 percent hydrochloric acid solution for boring out holes in the concrete. The mix is 99+ percent water and sand, and the rest of the stuff is mostly run-of-the-mill industrial chemicals (those friction-reducers use a polymer that also is used in children’s toys, for example). Real concerns, but not exactly an insurmountable environmental challenge.
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