Swiss consumer prices fell 0.4pc in March (year-on-year). Swiss CPI will be minus 1pc at least by July, nearing the level where spending psychology changes. By the time you have a self-feeding spiral, it is too late. “This is something that we must prevent at all costs. The current situation is extraordinarily serious,” said Philipp Hildebrand, a governor of the Swiss National Bank. The SNB is not easily spooked. It is the world’s benchmark bank, the keeper of the monetary flame. Yet even the SNB’s hard men have thrown away the rule book, taking emergency action to force down the exchange rate of the Swiss franc. Here lies the danger. If other countries try to export deflation by this means, we will face a second phase of the global crisis. Taiwan is already devaluing. Korea, Singapore, and Sweden all seem tempted to follow. Japan is chomping at the bit. “We don’t fully realise in the West what a catastrophic collapse Japan has suffered,” says Albert Edwards, global strategist at Société Générale. “The West has dumped a large part of its economic downturn onto Japan by devaluing against the yen.”
more from The Telegraph here.
The field boss claimed his privilege. Her knife
quenched all his lust for black girls. She got life
in the Big Rock and swung a chain-gang pick
a quarter century before she broke.
To save her keep they kicked her out, paroled.
Root, hog, or die! Thereafter she despoiled
our garbage cans of what our pampered pets
repudiated. We capering white brats
dogged her around, mocking that tethered gait.
She shambled, rolling-eyed down every street
in Birmingham, mumbling of “Jedgment.” All
our minds were shackled by her chain and ball.
John Thorne in The Liberal:
Moroccans often say their country, on the cusp of the Arab world, is different. They argue that Islamic extremism is an alien Middle Eastern disease. They are wrong. On 16 May 2003, a date that rings in Morocco as September 11th does in the West, fourteen young Casablancans proved them so.
It was a Friday night. The fourteen boys left their homes in a poor suburb and headed downtown, where they quickly dispersed. Some proceeded to fine restaurants, some to a fancy hotel, some to a Jewish community centre, one to the Belgian consulate and one to a Jewish cemetery. There they blew themselves up. The twelve dead bombers – two were arrested in the nick of time – murdered 33 civilians and injured over a hundred.
Religious intolerance is relatively rare in today’s Morocco, but draws on a long tradition. For centuries, Muslim pirates operated out of ports to Libya, claiming divine right to attack Western ships and enslave the crews. Their grip on the high seas was broken only by American military campaigns in the early 19th-century, and as late as 1883, the French explorer Charles de Foucauld was obliged to visit Morocco disguised as a Russian Jew, accompanied by an aging Algerian rabbi seeking the philosopher’s stone. Morocco remained off-limits to Christians until the French took it over in 1911. Jews were marginally tolerated, but often forced to live in closed ghettos and pay special tribute in accordance with Islamic law; most later emigrated to Israel.
Barry Eichengreen and Kevin H. O’Rourke in Vox (via Delong):
This and most other commentary contrasting the two episodes compares America then and now. This, however, is a misleading picture. The Great Depression was a global phenomenon. Even if it originated, in some sense, in the US, it was transmitted internationally by trade flows, capital flows and commodity prices. That said, different countries were affected differently. The US is not representative of their experiences.
Our Great Recession is every bit as global, earlier hopes for decoupling in Asia and Europe notwithstanding. Increasingly there is awareness that events have taken an even uglier turn outside the US, with even larger falls in manufacturing production, exports and equity prices.
In fact, when we look globally, as in Figure 1, the decline in industrial production in the last nine months has been at least as severe as in the nine months following the 1929 peak. (All graphs in this column track behaviour after the peaks in world industrial production, which occurred in June 1929 and April 2008.) Here, then, is a first illustration of how the global picture provides a very different and, indeed, more disturbing perspective than the US case considered by Krugman, which as noted earlier shows a smaller decline in manufacturing production now than then.
Figure 1. World Industrial Output, Now vs Then
SHAG RUGS ARE back in the stores. The rooms in decorating magazines are starting to look just a little bit cluttered. Solar panels are hot. Men are wearing beards. There are orange cars on the road, something not seen since the days of the flaming Ford Pinto. For all we know, avocado-colored appliances are about to mount a comeback. It’s true that the 1970s have been revived at regular intervals in fashion, music, and entertainment ever since they ended. But this time, the echo is different. It’s not just superficial scavenging but rather a deeper reconnection. Those ’70s aesthetics didn’t come from nowhere: they were born from a particular kind of change and uncertainty. And in the end, they embodied an imaginative way out of the malaise of the time. In the flush times of the early 1960s, as in the early 2000s, surfaces tended to be smooth, cool, and technological, reflecting a confidence that wars could be limited, economies could be fine-tuned, and that the best and the brightest had matters firmly in hand. In the 1970s, the world turned hairy, and our floor coverings, our clothes, and even our bodies soon followed.
more from Boston Globe Ideas here.
Benedict Carey in The New York Times:
Look around you. On the train platform, at the bus stop, in the car pool lane: these days someone there is probably faking it, maintaining a job routine without having a job to go to. The Wall Street type in suspenders, with his bulging briefcase; the woman in pearls, thumbing her BlackBerry; the builder in his work boots and tool belt — they could all be headed for the same coffee shop, or bar, for the day. “I have a new client, a laid-off lawyer, who’s commuting in every day — to his Starbucks,” said Robert C. Chope, a professor of counseling at San Francisco State University and president of the employment division of the American Counseling Association. “He gets dressed up, meets with colleagues, networks; he calls it his Western White House. I have encouraged him to keep his routine.”
The fine art of keeping up appearances may seem shallow and deceitful, the very embodiment of denial. But many psychologists beg to differ. To the extent that it sustains good habits and reflects personal pride, they say, this kind of play-acting can be an extremely effective social strategy, especially in uncertain times. “If showing pride in these kinds of situations was always maladaptive, then why would people do it so often?” said David DeSteno, a psychologist at Northeastern University in Boston. “But people do, of course, and we are finding that pride is centrally important not just for surviving physical danger but for thriving in difficult social circumstances, in ways that are not at all obvious.”
For most of its existence, the field of psychology ignored pride as a fundamental social emotion. It was thought to be too marginal, too individually variable, compared with basic visceral expressions of fear, disgust, sadness or joy. Moreover, it can mean different things in different cultures.
Jeffrey Sachs in The Huffington Post:
Two weeks ago, I posted an article showing how the Geithner-Summers banking plan could potentially and unnecessarily transfer hundreds of billions of dollars of wealth from taxpayers to banks. The same basic arithmetic was later described by Joseph Stiglitz in the New York Times (April 1) and by Peyton Young in the Financial Times (April 1). In fact, the situation is even potentially more disastrous than we wrote. Insiders can easily game the system created by Geithner and Summers to cost up to a trillion dollars or more to the taxpayers.
Here's how. Consider a toxic asset held by Citibank with a face value of $1 million, but with zero probability of any payout and therefore with a zero market value. An outside bidder would not pay anything for such an asset. All of the previous articles consider the case of true outside bidders.
Suppose, however, that Citibank itself sets up a Citibank Public-Private Investment Fund (CPPIF) under the Geithner-Summers plan. The CPPIF will bid the full face value of $1 million for the worthless asset, because it can borrow $850K from the FDIC, and get $75K from the Treasury, to make the purchase! Citibank will only have to put in $75K of the total.
Citibank thereby receives $1 million for the worthless asset, while the CPPIF ends up with an utterly worthless asset against $850K in debt to the FDIC. The CPPIF therefore quietly declares bankruptcy, while Citibank walks away with a cool $1 million. Citibank's net profit on the transaction is $925K (remember that the bank invested $75K in the CPPIF) and the taxpayers lose $925K. Since the total of toxic assets in the banking system exceeds $1 trillion, and perhaps reaches $2-3 trillion, the amount of potential rip-off in the Geithner-Summers plan is unconscionably large.
Dan Conover in Xark:
A client looking to invest in media asked me earlier this month for advice on what might replace failing newspapers. My response? There are plenty of interesting ideas in play, but the first meaningful test won't come until a major American city loses its only metro daily. So wait.
That's because metro newspapers are taking up the market space in which the innovation he's looking for must occur. Newspapers may be failing, but most do a passable job of limiting serious competition in their markets. What succeeds in the shadow of an established metro, therefore, may not be what ultimately winds up contending for the market positions vacated by Old Media giants.
I think that's decent investment advice, but Clay Shirky's March 13th essay on the end of the newspaper era placed some urgency on the question “What Comes Next?” And since I'm a recovering newspaperman who's been studying and writing and speaking about that question off and on for the past four years, I figured now might be a good time to stake out some useful predictions about the future of American journalism to 2020.
More here. [Thanks to Kris Kotarski.]
Benedict Carey in the New York Times:
As with some kinds of pain, subtle reminders of an itching sensation can get people scratching, often without being entirely aware of it.
“I give lectures about itching,” Dr. Giesler said, “and I’ll stand up there in front of a whole roomful of people, show a few slides and pretty soon I’ll look out and 90 percent of the audience is scratching.”
Like yawning, itching also seems to be contagious, which suggests a significant top-down influence from the brain.