Monthly Archives: februar 2012

Logisk brist: Penga eller livet Irland. #Lisboatraktaten #igjen

00ireland
Philip Pilkington (tviler på slektskap til Karl) er journalist og forfatter i Dublin. Han er ikke alene i å tenke sitt da den irske regjeringssjefen Enda Kenny annonserte at det må avholdes folkeavstemning om den ‘europeiske finanspakten’. Jeg trenger kanskje ikke minne om at Irland lever på EU og IMFs nåde?

Philip Pilkington: Vote or Die! – The Coming Irish Election Blackmail:

By Philip Pilkington, a journalist and writer living in Dublin, Ireland

Vote or die muth#%#^*#, muth#%#^*# vote or die,
Rock the vote or else I’m gonna stick a knife through your eye,
Democracy is founded on one simple rule,
Get out there and vote or I will muth#%#^*# kill you.

– P. Diddy ‘Vote or Die

The Irish Taoiseach Enda Kenny has announced that a referendum will be called so that the Irish people can vote on the new and oh-so-suicidal fiscal compact. If it is voted for Ireland will be subject to years of harsh austerity. Nothing new there. But, perhaps worst of all, if the vote goes through this austerity will crush the Irish economy into ruin wearing the mask of democratic consent.

Last week we reported murmurings coming from within the opposition party calling for a referendum. The senior opposition party adviser that I spoke to indicated that he might try to push for a referendum, calling the fiscal compact “madness”. Fair enough, we’re all agreed there. But this was probably a political manoeuvre plain and simple.

The opposition thought that they could have a few swipes at the government by questioning the democratic legitimacy of their decisions. But apparently the government have called their bluff and agreed to hold a referendum.

My reading is that the government are perfectly confident that they can push the vote through. The Irish people are against austerity, but they have a vague inclination that ‘There Is No Alternative’. The government are confident that they can play on this fear in order to push the public into voting the way they want them to.

The previous government did something similar with the Lisbon Treaty. The Irish people had originally voted it down much to the annoyance of the Eurocrats, so the Irish government repackaged it and made people vote again. They then launched a massive campaign scaring people into thinking that if they didn’t vote ‘Yes’ to the treaty they would see mass unemployment in the country. The campaign was called ‘Yes to Lisbon, Yes to Jobs’.

In Ireland at the time people joked around that we had voted ‘wrong’ last time and that we must now vote ‘right’ this time. Many people who had voted ‘No’ to the original treaty either did what they were told because they believed the government’s blatant lies about the link between the Lisbon Treaty and Irish employment or they simply stayed at home on voting day. Most people I know who voted ‘No’ the first time around were too cynical to vote a second time, resenting the fact that they were being treated like children by their government.

The PR campaign that was launched during the Lisbon campaign was carried by most major media outlets, most businesses and most political parties. Put simply, almost the entire Irish elite got behind it. The voices pointing out the hypocrisy of having the Irish people vote twice on the same issue were drowned out in a flood of misleading soundbites and ideological op-eds that poured forth from almost every outlet.

With the coming referendum on the fiscal compact the government and the media will ramp up the rhetoric to an even higher pitch. We already see business groups and major political parties coming out in support of the fiscal compact.

What’s more, the government won’t have to lie this time around. They will be able to quite honestly say that if the Irish people don’t vote the compact through our funding will be cut off. This will be far more effective than he nonsense they tried last time linking Irish employment to the Lisbon Treaty – and remember, even that worked when it was shoved down peoples’ throats at the time.

Put simply: this isn’t a real vote because no one in their right mind would vote for their own suicide. If the Irish people do dare to vote against the fiscal compact they will be told to vote again and battered with ever more serious threats (no doubt backed by European leaders who will come up with all sorts of awful things they will do to us if we don’t accept the terms). The democratic legitimacy gained by the vote will then be used in the coming years to justify the slow and painful death that our economy will be subject to.

After this referendum the Irish people will be seen to have made a real decision and will be said to have no reason to complain. This reminds me of an old point of logic.

A mugger approaches a man in a dark alley points a gun at him and says “Your money or your life”. Of course, the mugger is being dishonest because if the man refuses to fork over the cash the mugger will shoot him and take the money anyway. So, he really has no choice – if he doesn’t give over the money he will lose both his money AND his life.

Ireland will soon be put in a similar position. We will be given the false choice to either vote for immediate economic destruction or gradual economic destruction. No prizes for guessing what we’ll choose. And afterwards commentators and politicians will insist that we have no right to complain; after all, we handed over the money voluntarily… right?

(Via naked capitalism.)

Av dagens 530 milliarder euro fra ECB endte 26% av de i Italia

Screen shot 2012 02 29 at 22 50 59
All data er ikke samlet inn ennå, så vi vet ikke den nøyaktige fordelingen av de 530 milliarder euroene ennå. Det er nok ingen overraskelse at de som forsynte seg mest forrige gang, er i toppen denne gangen også. Det var Italia og Spania. Ingen kilder i den spanske sentralbanken har lettet på sløret, men The Wall Street Journal har spurt:

Spain’s Banco Bilbao Vizcaya Argentaria SA (BBVA) and CaixaBank SA (CABK.MC) participated in the European Central Bank’s long-term refinancing operations, or LTRO, spokesmen for the two lenders said Wednesday.

BBVA, Spain’s second-largest bank by market value, took a «similar amount» to the EUR11 billion it had borrowed in the first 3-year LTRO tender, a spokesman said.

A spokesman for CaixaBank, the no. 3 lender by market value, said the bank didn’t plan to disclose the amount taken, but confirmed that the lender had participated. The Barcelona-based bank had taken more than EUR12 billion in the first tender.

Officials at Banco Santander SA (STD) and Bankia SA (BKIA.MC), the other two big Spanish banks, declined to comment.

Ikke mange minuttene etter at størrelsen på Long Term Refinancing Operations 2.0 ble kjent gikk ryktet om at sentralbanken intervenerte i andrehåndsmarkedet for å kjøpe korte portugisiske statsobligasjoner. På ett tidspunkt steg 10-åringen med over 6%, mens 2-åringen sank. Ved forrige LTRO auksjon endte ca. 9% i Portugal. Vi har ennå ikke tall på denne runden, men Wall Street Journal rapporterer at:

A European Union official called the ECB’s move «a game changer» for Portugal’s private sector.

A person familiar with the situation said Banco BPI SA (BPI.LB) borrowed Wednesday from the ECB, which dished out EUR529.5 billion in cheap, three-year loans to 800 lenders. That amount was roughly consistent with what bankers, investors and analysts had expected.

Banco Espirito Santo SA (BES.LB), Portugal’s largest bank by market capitalization, and Banco Comercial Portugues SA (BCP.LB) had also indicated they would participate in Wednesday’s offering after each borrowed EUR5 billion under the previous facility given in December. The amount borrowed Wednesday wasn’t known.

10-åring:Screen shot 2012 02 29 at 23 03 09
2-åring:
Screen shot 2012 02 29 at 23 04 44

Vil du beholde jobben, så lang over lønna. Vent, hva? #Hellas #hvemellers

I de siste dagene har jeg lest nesten et halvt dusin tilfeller av absurd forretningsskikk i Hellas. Et byråkrati blåst for sunn fornuft. Her er noen av historiene jeg har lest. Vi begynner med en bok/kaffebutikk som hverken selger bøker eller kaffe (hele artikkelen er verdt å lese):

Note from Athens: Feeling on the ground has palpably changed « Euro Area Debt Crisis by Megan Greene:

«This is best encapsulated in an anecdote from my visit to Athens. A friend and I met up at a new bookstore and café in the centre of town, which has only been open for a month. The establishment is in the center of an area filled with bars, and the owner decided the neighborhood could use a place for people to convene and talk without having to drink alcohol and listen to loud music. After we sat down, we asked the waitress for a coffee. She thanked us for our order and immediately turned and walked out the front door. My friend explained that the owner of the bookstore/café couldn’t get a license to provide coffee. She had tried to just buy a coffee machine and give the coffee away for free, thinking that lingering patrons would boost book sales.  However, giving away coffee was illegal as well. Instead, the owner had to strike a deal with a bar across the street, whereby they make the coffee and the waitress spends all day shuttling between the bar and the bookstore/café. My friend also explained to me that books could not be purchased at the bookstore, as it was after 18h and it is illegal to sell books in Greece beyond that hour. I was in a bookstore/café that could neither sell books nor make coffee.»

Forhandlingene i Hellas er/har vært brutale. En av følgene er noe bisarre ordninger i gresk arbeidsliv. For nærmere 64 000 mennesker er det bare en mulighet for å beholde jobbene. Ikke få betalt en måned. Avtalen er retroaktiv, med konsekvensen at noen må betale tilbake penger for å beholde jobben. De kaller det ‘negativ lønn’:

Salary cutbacks (called «unified payroll») for contract workers at the public sector set to be finalized today. Cuts to be valid retroactively since november 2011. Expected result: Up to 64.000 people will work without salary this month, or even be asked to return money. Amongst them 21.000 teachers, 13.000 municipal employees and 30.000 civil servants.

Og her er historien om nettbutikken Oliveshop.com. Nettbutikken som nesten ikke var.

According to Ekathimerini, the co-founders’ quest to complete all the paperwork for the nascent business included a straight-faced request by the health ministry that each company shareholder provide chest X-rays and a stool sample. A local bank also asked the young entrepreneurs for the entire site be written exclusively in Greek—even though it was mostly aimed at foreign buyers—so that the financial institution could easily confirm the credit card details of customers. (The eventually opted to use PayPal instead.)

Dette er ikke grunnen til at Hellas ligger i ruiner i dag, men det er et seriøst problem for en økonomi som forsøker å stable seg på beina.
Screen shot 2012 02 29 at 22 23 24Nummer 135 i verden. Grøss.

Ett bilde, ett panikkanfall. Finanskrisegrøss #timeline #ecb

Ett bilde forteller om det påfølgende panikkanfallet:

Klikk for større bilde

Dette er fra den interaktive tidslinjen til Den europeiske sentralbanken. Grøss.

Økonomer skjønner ikke det finansielle systemet.

Cathy O’Neill er dataingeniør og ser algoritmene i aksjon. Hun er ikke imponert over hvor enkelt Krugman et. al. forsøker å fremstille løsningene på de økonomiske problemene. Et friskt pust fra en verden lever av kompleksitet.

Cathy O’Neil: Economists Don’t Understand the Financial System (Quelle Surprise!) « naked capitalism: «By Cathy O’Neil, a data scientist who lives in New York City and writes at mathbabe.org

A bit more than a week ago I went to a panel discussion at the Met about the global financial crisis. The panel consisted of Paul Krugman, Edmund Phelps, Jeffrey Sachs, and George Soros. They were each given 15 minutes to talk about what they thought about the Eurocrisis, especially Greece, the U.S., and whatever else they felt like.

It was well worth the $25 admission fee, but maybe not for the reason I would have thought when I went. I ended up deciding something I’ve suspected before. Namely, economists don’t understand the financial system, and moreover they don’t get that they don’t get it. Let me explain my reasoning.

The panelists all were pretty left-leaning guys, and each of them talked about how the U.S. government should stimulate the economy in one way or another. Krugman kept saying that hey, this isn’t too hard, we’ve seen financial crises before, and this is no different: we should immediately pass a massive stimulus package, that’s the one and only thing that we should be discussing. Sachs was very consistently saying we should do something else: namely, start planning long-term for the future. He focused on the percent of tax dollars going into infrastructure and basic education and research. Phelps also wanted stimulus, but he consistently referred to his own economic models in how exactly it should work. I didn’t completely follow his train of thought.

Soros was the most interesting of the four, in my opinion. He started by saying that we should all acknowledge that, as nice as it would be to think we can model the economy and feel control over the situation, this is a pipe dream and we should get used to not really knowing what will happen when we do one thing versus another. He suggested that we should instead work together to develop a theory, or perhaps even an philosophy, that assumes uncertainty itself. He ended by saying that, even with the three colleagues on the panel with him, who are essentially all united in thinking we need to be proactive, his ideas are essentially being ignored.

The rest of the evening essentially consisted of everyone ignoring Soros and arguing about how Keynesian they all were and how exactly different kinds of stimulus would work and which way they should use 2% of GDP to jumpstart the world’s economy. So basically exactly what Soros said would happen.

It got me more and more riled up. Here are these expert economists, two of whom have Nobel Prizes and the third who runs the Earth Institute at Columbia and is considered a huge swinging dick in his own right, and they don’t seem to acknowledge how much power they actually have over the situation (specifically, not much). For that matter, they clearly don’t know the nitty gritty of the financial system. To listen to them, all you need to do is spread a thick paste of money on the system and it would revive whole cloth. Soros is the exception, probably for the reason that he actually traded and made money inside the system.

At the end I asked a question, since they allowed a few questions, and as you know I’m not shy. I asked how we are going to make the system simple enough to actually make it possible to regulate it. Krugman basically said that Dodd-Frank is going to do it. My conclusion from that is that Krugman must really have only an outline in his head of how this stuff works- the devil, as we know, is really in the detail, and I’m too acquainted with the Volcker Rule’s list of exemptions to have a lot of hope on this score. To be fair, Phelps mentioned Amar Bhide’s book A Call for Judgment, which I’m reading and seems pretty good and at least addresses this exact issue head-on.

Overall, the evening brought me back to the credit crisis, and working at D.E. Shaw, when Larry Summers was consistently quoted at the firm as saying that the “magical liquidity fairy” needed to come and “spread some magical liquidity dust” in the markets to make everything better. No, I’m not kidding.

What I felt then and what I still feel is that these super influential economists are so high on their clean, simple economic models of the world (about the only variables of which are GDP, stimulus, and tax rates) that they focus on the model to the exclusion of the secondary issues. Sometimes you get important results this way: simplifying models can be really useful. But sometimes it’s really truly misleading to do so, and I believe this is one of those cases.

I’m left thinking that they (the economists) are so entranced with their simplified world view that still don’t understand what actually fucked up the world in 2007 and 2008, namely the CDO market’s implosion. Message to Krugman: this is not exactly like other financial crises, because it’s partly caused by complexity, and nobody seems to have the balls to fix it. The problem is that the financial system has been allowed to get so complicated and so rigged in favor of the people with information, that normal people, including homeowners, credit card users, politicians, and regulators have been left in the dark, and many of the little guys are still stuck in ludicrous contracts left over from the outrageous securitizations that took place in the CDO market.

What is especially enraging is how these same economists are still the experts that people turn to to help figure out how to get out of this mess, when they don’t actually understand the mess itself. Why else would a large audience be willing to pay $25 a piece to hear them talk about this? Why else would Obama be considering Larry Summers to lead the World Bank?

As an aside: please, Mr. President, do not let Summers lead the World Bank. He does not understand the system well enough to lead it. And he is too arrogant to admit what he doesn’t know. I can introduce you to a bunch of people that may be less imposing but are more informed, more ethical, and wiser. Give me a call any time and we can chat and form a short list of candidates.

By the way, I’m not saying we shouldn’t have a major stimulus, or that we shouldn’t do longer term planning and invest more in infrastructure. I think we should do both. But I also think those efforts will be futile unless we enforce a basic system that is simple enough to be regulated. Otherwise we will be reliving this entire ordeal in another 15 years.»

Visste du det var pannekakedag i dag? The Economist er oppdatert.

Pancake4

Overalt på internasjonale sider har det vært uvanlig mye pannekakeprat i dag. På twitter har Happy Pancake Day trendet siden morgenen.

Vel, det viser det at det er Shrove Tuesday i dag. The Economist forklarer.

IN CELEBRATION of Shrove Tuesday, some Christians (and many indulgent atheists) cook pancakes. The tradition derives from the practice of using up all the fat in the cupboard in a great binge, before the 40-day fast of Lent began.

Og det følger med en graf.

To honour this we have constructed a comparison of the costs of pancake ingredients across the world from data compiled by the Economist Intelligence Unit, our sister company. Delia Smith, a British cookery writer, recommends the use of 110g of sifted flour, 2 eggs, 200ml of milk and 50g of butter to make 12-15 pancakes. Roughly scaling this up by ten shows how expensive a generous pancake party (consisting of around 130 pancakes) might be. The data are all from cities, and so should be taken with a pinch of sugar and a squeeze of lemon.

20120225 WOC959
Norge er det 4. dyreste landet å lage pannekaker i. Smør og mel er relativt billig, mens melk og egg er relativt dyrt.

Skandale.

Hellas – Hvor ble det av alle penga?

Dagen startet bra. God stemning i Brussel, optimistiske, smilende, men bastante politikere gikk opp den røde løperen i dag. Hellas-krisen skulle løses. Detaljene gjenstod. Ingen lang natt, men en avklaring om den private hårklippen, Draghi skulle avklare ECB sine greske obligasjoner, og IMF/EU/ECB skulle avklare de finanspolitiske avtalene. Grekerne var innstilit på å klare 120% gjeld av BNP innen 2020.

Den gang ei.

Pressekonferansen kl. 23 mandag kveld er utsatt, veldig få rykter, og lekkasjer kommer ut. Starten på møtet var uvanlig tidlig, fortsatt ingen avklaring.
Noen sier 160% gjeld av BNP innen 2020 må godtas. Noen sier hårklippen til private kreditorer har økt til 53%. Andre sier ECB ikke vet helt hva de skal gjøre med obligasjonene. FT har allerede førstesiden i morgen klar. Saken er noen av lekasjene (som Reuters hadde først), samt dette med 160%. Dette betyr at hvis 120% skal overholdes, må Hellas ha ca 245 milliarder euro for å fylle hullet (avtalen er på 130 nå).

Så mens vi venter kan vi tygge litt på spørsmålet: Hvor ble det av alle penga?

Det høres ut som noe fra en Olsenbandenfilm, men det er et spørsmål jeg ikke har sett angrepet med grafer. (Noen tips?)

For at vi skal holde orden på ting, formulerer vi den Greske økonomien som en likning fra introkurset i makroøkonomi:

BNP = Privat konsum + Private Investeringer + Statsbudsjettet + Eksport – Import.

For at BNP i Hellas skal øke må alle variabler bortsett fra import øke. Øker importen forsvinner penger ut av Hellas, og hjelper lite på produksjonen. Så hva har skjedd?
Screen shot 2012 02 20 at 23 34 07
Det ser ikke så værst ut for Hellas siden 1985. Slutten av 1990-tallet ser litt rolig ut, men etter 2000 skyter Hellas fart. Merkelig det.

La oss begynne med import og eksport. Hva har skjedd?

Betalingsbalansen definerer vi som summen handelsbalansen (eksport – import), renter og utbytte, og overføringer (som bistand).
Her er tall for Hellas fra IMF:
Screen shot 2012 02 20 at 22 55 56
Ta 2006. BNP var ca. $250 milliarder. Betalingsbalansen var ca. $30 milliarder. Det er 12% av BNP. I negativ forstand. Lånte penger.

Hva med statsbudsjettet? Var det overskudd, eller underskudd?
Screen shot 2012 02 20 at 23 47 10
Tallene er prosent av BNP, og har aldri sett plussiden siden millenniumet. Mer lånte penger.

Javel, så vi har store underskudd på betalingsbalansen, og vi har store underskudd over statsbudsjettet. Hvor gikk alle pengene?
Før du får de to siste grafene, la oss bli mer spesifike:

Greece went on a spending spree, allowing public sector workers’ wages to nearly double over the last decade, while it continued to fund one of the most generous pension systems in the world. Workers when they come to retire usually receive a pension equating to 92 per cent of their pre-retirement salary. As Greece has one of the fastest ageing populations in Europe, the bill to fund these pensions kept on mounting.

Generøse pensjoner, og en generasjonskontrakt med de som går over i pensjonstilværelsen.

Tax evasion, endemic among Greece’s wealthy middle classes, meant that the Government’s tax revenues were not coming in fast enough to fund its outgoings.
Hosting the Olympics in 2004, which cost double the original estimate of €4.5 billion, only made matters worse.

Etterhvert som den lånte moroa tok av, begynte også rentebetalingene (utelukkende renter) også å ta av.

By the start of this year Greece’s debt had hit €300 billion, more than the entire value of its annual GDP. This is unlikely to fall quickly, as its current budget deficit – how much its borrowing exceeds tax receipts – is running at 13.6 per cent of its gross domestic product, twice the Eurozone average.

Da har vi kommet til nest siste graf:
Screen shot 2012 02 20 at 23 51 31
Du kan se at Hellas har klart å holde offentlig gjeld som BNP ganske stabilt fra 2000 og frem til 2006-2007. I over 6 år var det ingen som ropte varsko, mest fordi veksten fortsatte (se graf #1).

Midt på 2000-tallet doblet BNP seg farlig fort, og når det går bra er ingen villig til å trykke på bremsen.

Så pengene gikk til å betale/forplikte seg til pensjoner, betale for import, og privat forbruk.
Screen shot 2012 02 21 at 00 28 37(Siste graf viser forbruk i husholdninger i konstante 2005 dollar i Hellas.)

Den finske Finanstilsynet-direktøren går av etter avsløringer om tiden i Landsbanki

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Det første sitatet, fra Reuters:

The FME said the report showed that, in a response to a request by the FME in 2001 for information on Landsbanki’s international operations, Andersen left out two Guernsey-registered companies owned by a holding company that was foreign-registered albeit fully owned by Landsbanki.

The FME said in a statement on its website that Andersen did nothing illegal at the time but the news risked tarnishing his credibility as director of the FME.

Merk at gamle såvidt-synder episoder kommer tilbake, og at tillit er hellig for et finanstilsyn.

Sitat #2:

«Our view is not that these events cast doubt on him as a fit and proper person to perform his day-to-day duties but as this information is now in the public eye, it could distract the operation of the FME and reduce public trust and confidence in the institution,» the report, commissioned by the FME and posted on its website, said.

Gunnar Andersen sier til Morgunbladid at han vil kjempe for jobben.

Foto:Ragnar Th. Sigurðsson

HP-filter eller ikke HP-filter. Det er gapets spørsmål #nerdete

Det har gått litt hett i potensiell produksjonsdiskusjonen i det siste i USA. For å kunne si noe om svingninger i økonomien danner økonomer seg et referansebilde. En stilisert økonomi vi kan sammenlikne virkeligheten med. En perfekt økonomi, eller en potensiell økonomi.

Problemet er selvfølgelig at det er mange måter å konstruere en potensiell økonomi.

Mark Thoma går gjennom ulike metoder for å måle denne potensielle økonomien, og viser at det er en viktig diskusjon.

Vi hopper til den siste modellen han viser, nemlig at den potensielle økonomien er glattet ut med et filter for å kompensere for ulike problemer.

Den røde linken er trend siden 2002 (i artikkelen kan du se trend fra 1947), og den blå er den naturlige logaritmen av real BNP.

Med dette filteret, kalt HP filteret, er økonomien i USA i dag over trend.

Dette viser at diskusjonen om økonomien må gå dypere enn litt modellering.

Unfortunately, there is no perfect way to choose among the gap models (the problem is that you have one time-series, output, and you are trying to extract two things, a trend and a cycle, and that can’t be done without an assumption of some sort — and when assumptions are involved, there’s room to argue about their validity). If I had to choose, it would be somewhere between the first and second models. That is, I think the long-run trend for GDP is lower than the pre-crisis track we were on, but not as low as the more dour among us believe (and, to be clear, I endorse the stochastic trend model, but from the accumulated econometric evidence I’ve seen, I think aggregate demand shocks are the more important source of variation in output over time — e.g. the movement in the trend in model three is much too large). In any case, I think there’s enough uncertainty about the size of the gap, and enough asymmetry in the errors — assuming model three when model one is actually true is worse than the other way around — to justify aggressive policy actions to help the economy.

Den greske fremtiden…

Det kommer til å bli mange steiner kastet, mange utsagn til journalister, mange artikler, mange rykter om den greske økonomien i dagene/måneden som kommer. Kommer tilbake til detaljene senere denne uka, men la oss trekke opp de store linjer først.

Feb 20th: Euro-area finance ministers meet in Brussels.
Week of Feb 20th: Greek parliament to vote on legislation to insert «collective action clauses» in bonds.

March 1st and 2nd: EU leaders meet in Brussels.
March 8th: ECB holds rate meeting
March 8th – 11th: €200bn private sector bond swap is scheduled.
March 12th: Euro-area finance ministers meet in Brussels
March 20th: €14.4bn of Greek bonds mature.

Tikk, takk.