by Zero Hedge - March 27th, 2011 11:09 pm
Courtesy of Tyler Durden
The latest in the tragic story that just gets weirder by the minute.
- TEPCO’s mishandling of info on nuclear crisis ‘unacceptable’: Edano
- Partial meltdown of fuel rods believed to be temporary: Edano
- Radioactive water from No. 2 reactor due to partial meltdown: Edano
- Contaminated water due to condensed steam, not reactor crack: Edano
And our personal favorite:
- Locals within 20-km evacuation zone asked not to return for now
As this whole farce has gone beyond the surreal, we are now actively waiting for a cartoon Mr. Burns to show up at any ongoing press conference and announce that Springfield Nuclear Power Plant has LBOed Fukushima with Discount Window financing, at a #Ref! EV/EBITDA considering 9501.JP will not see any positive cash flow for millennia, and is appointing Mr. Sparkle (aka Homer Simpson) chief safety inspector.
Bernanke On The Effects Of Oil Price Shocks, And Why The Fed Will Never Tighten In Response To Oil At Any Price
by Zero Hedge - March 27th, 2011 11:00 pm
Courtesy of Tyler Durden
Curious what Bernanke thinks of ongoing oil price shocks? Wondering how long before the great Chairsatan will tighten in response to $120 Brent? The shorts answer – never. But don’t take our word for it. Here is a paper titled by the eponymous nemesis of printer cartridge conservation, titled “Systematic Monetary Policy and the Effects of Oil Price Shocks” written when the urge for genocide was just a germ, a seedling if you will, back in the good old 1997. In it, Bernanke, who was yet to make his epochal statement about paradropping crisp Benjamins, makes it all too clear why neither oil at $120 nor oil at $1,120 will be enough to push the FOMC to hike: “an important part of the effect of oil price shocks on the economy results not from the change in oil prices, per se, but from the resulting tightening of monetary policy.” And there you have it: it is not the natural price response to a period of extensively loose monetary policy that is the issue, it is the Fed doing the right thing and ending the spigot that will be the end of the economy, sayeth the Bernank. And somehow this man runs the world…
Full paper below:
by Zero Hedge - March 27th, 2011 10:25 pm
Courtesy of Tyler Durden
The next in a continuing series (most recently: The Transition to a Free Society).
Submitted by Free Radical
The Governance of a Free Society
That government is best which governs not at all. – Henry David Thoreau
Because the state is inherently antisocial, we make a distinction between government and governance. We distinguish, that is, between an overarching entity on the one hand and an underlying process on the other, answering Thoreau’s question by asserting that the next step “towards recognizing and organizing the rights of man” will be taken via the latter, i.e., via the self-organization that is but another term for the spontaneous order by which human society came to be in the first place and has evolved ever since, concomitantly evolving the rules necessary for its governance. And the fact is, all one really need do to know that this is true is to look around:
Those of us residing in the United States or any of the British Commonwealth countries live under an extremely sophisticated and subtle scheme of rules, very few of which were created by government. Since almost none of the rules that bring peace and order to our existence were created by government, little argument should be required to establish that government is not necessary to create such rules. On the contrary, it is precisely the rules that were created by government that tend to undermine peace and order.
If looking around does not suffice, of course, one can explore the matter in depth, mindful, however, that to whatever extent rational argument and empirical analysis fail to persuade, the fact remains that actual experimentation is prohibited. That is, the state does not allow free societies to be attempted for the simple reason that the state depends on the legalized theft of taxation for its existence. And simply put, a successful experiment in a free society would therefore threaten the state’s chokehold (for that is what it is) on humanity.
But as its chokehold is already being threatened (again, look around), we assert that the time is not far off when the state will be unable to prevent the necessary experimentation, including that which is based on the implementation of an actual social contract. For while “persons’ moral and/or political…
by Zero Hedge - March 27th, 2011 10:09 pm
Courtesy of Tyler Durden
By now the only homo sapiens in the world who don’t realize that the Japanese earthquake/tsunami/nuclear disaster will have profound implications on supply chains, inventory levels, profit margins, corporate bottom lines and broad economic output are Wall Street sell side analysts, who remain convinced that the Lemming view is the right one, at least until management teams start coming out, most likely in the upcoming week, and issuing profit warnings, conveniently blaming their declining profitability on Japan, the weather and other “one time items.” In fact, in the old tried and true mentality of “he who defects first, loses the least” and the even trieder and truer mentality of “never let a crisis go to waste” we may suddenly see a scramble of management teams taking advantage of the economic adversity posed by Japan to buffer their own declining margins, therefore buying them at least a quarter before the market realizes that the entire QE2 inspired “golden age” is now over. After all, one would be stupid not to blame an event which most will perceive as non-recurring, thereby eliminating its follow through to the top and the bottom line in future quarters and minimizing the impact on the stock price. So while corporate treasurers and CFOs are wording their press releases appropriately, which we expect will start hitting the tape as soon as tomorrow, here is the most recent recap of known auto and electronic-maker disruptions as reported by Reuters.
Following is a roundup of the impact of this month’s devastating earthquake and tsunami on Japanese manufacturers of cars and electronics.
Plant shutdowns in Japan threaten supplies to manufacturers across the globe of items from semiconductors to car parts.
Japanese companies are not only reeling from damage to factories and suppliers in quake-hit northeastern Japan but are also suffering from fuel shortages nationwide and power outages in the Tokyo area that are affecting production, distribution and the ability of staff to get to work.
* Toyota Motor Corp halted most operations at 18 factories that assemble Toyota and Lexus vehicles in Japan. It has restarted production of three hybrid models, the Prius, Lexus HS250h and CT200h, from March 28 at two factories but will suspend output for one day this week, on March 30. Toyota is making car parts at plants near its…
by Zero Hedge - March 27th, 2011 9:48 pm
Courtesy of Tyler Durden
When even Goldman’s summary update on Ireland, which conveniently ignores today’s news that the country may be preparing for a senior bondholder haircut and most certainly ignores last week’s dump of Irish paper by LCH Clearnet from the repo market), is unable to find much if anything good to say about Irish bonds it is really time to get out of dodge (not like anyone was still left in it). The kicker in Francesco Garzarelli’s just released analysis: ”With around EUR 30bn worth of senior bonds maturing in 2011-12 (40% of which is not already government guaranteed) and under continued reduction of funding efficiency of the covered bond program, rolling over maturing debt remains indeed one of the biggest challenges faced by the Irish banks.” Everything else is noise. Add to this the Portuguese government crisis, its own funding crunch, and the rapidly deteriorating German political crisis and Europe will be a very fun place over the next few months. In fact for once we agree with Goldman: “In light of this, Irish bonds [ZH: aka Paddy Paper] will continue to exhibit high volatility, in our view.”
From Goldman Sachs: Ireland in the Spotlight, Sunday 27 March 2011
Key announcements this coming Thursday on the restructuring of the Irish banks could also involve enhanced external policy support. If confirmed, this may lead to a reduction in the credit risk premium embedded in Irish government bonds, which is now hovering at the highest level since the crisis started (2-yr Irish bonds closed around 800bp over their German counterparts on Friday). Nonetheless, we are also of the view that the EMU ‘non-core’ sovereign market is heading towards an even greater segmentation between the small ‘outer peripherals’ countries (Ireland, Greece, and Portugal) and the higher rated and more liquid issuers, like Italy, Spain and Belgium. In light of this, Irish bonds will continue to exhibit high volatility, in our view.
The EU Summit came and went, as most market moving information (e.g., the upsizing of the EFSF, and the term sheet of the ESM) had been released previously. There, nonetheless, was some disappointment on Ireland, as a much anticipated reduction to the lending terms provided by the EFSF was not agreed upon. Instead, the decision was loosely linked to an ‘evaluation of the consequences for the financial support program’ of the planned restructuring of the Irish…
by ilene - March 27th, 2011 8:33 pm
Courtesy of Robert Reich
Why isn’t Washington responding?
The world’s third largest economy suffers a giant earthquake, tsunami, and radiation dangers. A civil war in Libya and tumult in the Middle East cause crude-oil prices to climb. Poor harvests around the world make food prices soar.
All this means higher prices. American consumers, still reeling from job losses and wage cuts, will be hit hard. (Wholesale food prices surged almost 4 percent in February, the largest upward spike in more than a quarter century.)
Even before these global shocks the U.S. recovery was fragile. Consumer confidence is at a five-month low. Housing prices continue to drop. More than 14 million Americans remain jobless, and the ratio of employed to our total population is at an almost unprecedented low.
So you might think our elected representatives would want to avoid a repeat of what happened the second half of 2010 when the fragile recovery began tanking. They’d certainly want to prevent a double-dip recession.
You’d think they’d be creating booster rockets to counter these recessionary forces – freeing up more spending, exempting the first $20,000 of income from payroll taxes, imposing a moratorium on bank foreclosures, giving Americans another six months to file their income taxes, lending states whatever money they need to prevent more of their own budget cuts.
Amazingly, the big debate in Washington is about how whether to cut $10 billion or $61 billion from the federal budget between now and September 30.
House Majority Leader Eric Cantor recently stated the Republican view succinctly: “Less government spending equals more private sector jobs.”
In the past I’ve often wondered whether they’re knaves or fools. Now I’m sure. Republicans wouldn’t mind a double-dip recession between now and Election Day 2012.
They figure it’s the one sure way to unseat Obama. They know that when the economy is heading downward, voters always fire the boss. Call them knaves.
What about the Democrats? Most know how fragile the economy is but they’re afraid to say it because the White House wants to paint a more positive picture.
And most of them are afraid of calling for what must be done because it runs so counter to the dominant deficit-cutting theme in our nation’s capital that they fear being marginalized. So they’re reduced to mumbling “don’t cut so much.” Call them fools.
by Zero Hedge - March 27th, 2011 8:28 pm
Courtesy of Tyler Durden
With David Rosenberg’s free economic updates soon to be a thing of the past, now that the Gluskin Sheff strategist has decided to go premium, it seemed there may be a large void needing to be filled in the economic commentary space. It appears said void may have already been filled, by Grant Williams, publisher of the fantastic Things That Make You Go Hmmm report which combines individual commentary and linked content in one delightful package, who after a brief hiatus is now back online and making readers go hmmm. Whereas Williams previously published within the editorial confines of bulge bracket wannabe Jefferies, he has since liberated himself (and his cynicism), and is now publishing, as he puts it, “under my own auspices and without any compliance filter.” Zero Hedge agrees that those are certainly the best auspices and the best filter. So for those for whom TTMYGH is a new summary, here is your introduction.
by ilene - March 27th, 2011 8:27 pm
Courtesy of Robert Reich
Can we please agree that in the real world corporations exist for one purpose, and one purpose only — to make as much money as possible, which means cutting costs as much as possible?
The New York Times reports that G.E. marketed the Mark 1 boiling water reactors, used in TEPCO’s Fukushima Daiichi plant, as cheaper to build than other reactors because they used a comparatively smaller and less expensive containment structure.
Yet American safety officials have long thought the smaller design more vulnerable to explosion and rupture in emergencies than competing designs. (By the way, the same design is used in 23 American nuclear reactors at 16 plants.)
In the mid-1980s, Harold Denton, then an official with the Nuclear Regulatory Commission, said Mark 1 reactors had a 90 percent probability of bursting should the fuel rods overheat and melt in an accident. A follow-up report from a study group convened by the Commission concluded that “Mark 1 failure within the first few hours following core melt would appear rather likely.”
The National Commission appointed to investigate the giant oil spill in the Gulf of Mexico last April recently concluded that BP failed to adequately supervise Halliburton Company’s work on installing the well.
This was the case even though BP knew Halliburton lacked experience testing cement to prevent blowouts and hadn’t performed adequately before on a similar job. In short: Neither company bothered to spend the money to ensure adequate testing of the cement.
Nor did Massey Energy spend the money needed to ensure its mines were safe.
And so on.
Don’t get me wrong. No company can be expected to build a nuclear reactor, an oil well, a coal mine, or anything else that’s one hundred percent safe under all circumstances. The costs would be prohibitive. It’s unreasonable to expect corporations to totally guard against small chances of every potential accident.
Inevitably there’s a tradeoff. Reasonable precaution means spending as much on safety as the probability of a particular disaster occurring, multiplied by its likely harm to human beings and the environment if it does occur.
Here’s the problem. Profit-making corporations have every incentive to underestimate these probabilities and lowball the likely harms.
by ilene - March 27th, 2011 8:12 pm
Since the financial crisis of 2008, one of the most revealing spectacles has been the parade of financial elites who petulantly insist that they are the victims of societal hostility: political officials heap too much blame on them, public policy burdens them so unfairly, the public resents them, and — most amazingly of all — President Obama is a radical egalitarian who is unprecedentedly hostile to business interests. One particularly illustrative example was the whiny little multi-millionaire hedge fund manager (and CNBC contributor), Anthony Scaramucci, who stood up at an October, 201o, town hall meeting and demanded to know: "when are we going to stop whacking at the Wall Street pinata?"
The Weekly Standard now has a very lengthy defense of — including rare interviews with — Charles and David Koch, the libertarian billionaires who fund everything from right-wing economic policy, union-busting, and anti-climate-change advocacy to civil liberties and liberalized social policies — though far more the former goals than the latter. In this article one finds the purest and most instructive expression of billionaire self-pity that I think I’ve ever seen — one that is as self-absorbed and detached from reality as it destructive. It’s really worth examining their revealed mindset to see how those who wield the greatest financial power (and thus the greatest political power) think of themselves and those who are outside of their class.
I’m not someone who sees the Koch Brothers as some sort of unique threat. I mostly regard them as little more than a symbol of the death of democratic values in the U.S. — the way in which the possession of vast financial resources is an absolute prerequisite to making any impact on the national political process, and conversely, how those without such resources are politically inconsequential and impotent (short of their fomenting serious social unrest). Every political movement needs demons lurking behind every problem — the more hidden and omnipotent the better — and the Koch Brothers now serve the same function for the Left as George Soros long served for the Right: the bogeymen who motivate the loyalists and on whom everything bad, including political losses, can be blamed.
by ilene - March 27th, 2011 7:50 pm
Courtesy of Tyler Durden
Yet another clip of the March 11 tsunami advent has emerged and this one could be by far the most jarring. Nothing but the brute force of nature here. And this is what central planners believe can be papered over with a few trillions monetary ones and zeroes?