The beard of understanding

Tom Friedman --

Excuse me, President Morsi, but there is only one reason the Iranian regime wants to hold the meeting in Tehran and have heads of state like you attend, and that is to signal to Iran’s people that the world approves of their country’s clerical leadership and therefore they should never, ever, ever again think about launching a democracy movement — the exact same kind of democracy movement that brought you, Mr. Morsi, to power in Egypt.

President Morsi, having ignored Tom Friedman and gone to Tehran to speak directly to the Assad-backing Ayatollahs --

"We should all express our full support to the struggle of those who are demanding freedom and justice in Syria and translate our sympathies into a clear political vision that supports peaceful transfer (of power) to a democratic system," Morsi said in his opening statement. Morsi slammed Assad's rule, saying that the world had a "moral duty" to stand with the Syrian people in their struggle "against an oppressive regime that has lost its legitimacy." He said having a democratic system in Syria "reflects the desire of the Syrian people for freedom, justice and equality and at the same time protects Syria from entering into a civil war or being divided by sectarian clashes."

The easy thing would have been to stay away and earn favourable headlines in the American media. Instead he showed up and told it like it was.

Update: According to this Al-Arabiya story (easily run through Google Translate), Iranian state television provided a doctored translation of Morsi's speech, replacing Syria references with Bahrain, changing the name of Arab Spring to Islamic Awakening, and taking out references to various Caliphs (a theological issue).

So it was just a German racket

European Central Bank President Mario Draghi writing in Die Zeit today --

The debate is taking place because the euro area has not yet fully succeeded as a polity. Currencies ultimately depend on the institutions that stand behind them. When the euro was first proposed, there were those who said it would have to be preceded by a long process of political integration. This was because sharing a currency would imply a high degree of joint decision-making. Member countries would be a “Schicksalsgemeinschaft” and would need strong common democratic underpinnings.

Who amongst us could have forgotten those times in 1990s when we were assured that the single currency would work because after all it was a Schicksalsgemeinschaft?

Incidentally, the phrase means "community of fate."

Further incidentally, does it seem like we need more German capabilities lately?

Indeed

The screen backdrop as Mitt Romney officially crossed the delegate threshold at what sounded like a sparsely attended nominating session in Tampa.

Photo: REUTERS/Mike Segar

German for beginners

Angela Merkel's man on the ECB Board Jörg Asmussen speaking in Hamburg today:

Kolumnen von Zeitungsherausgebern und Online-Bloggern; offene Briefe von Professoren; am eigenen Interesse orientierte Analysen von Marktteilnehmern in Deutschland und weltweit: es fehlt nicht an Untersuchungen, Bewertungen, Szenarien von scheinbar unabwendbaren Katastrophen, und Ratschlägen, was „die Politik“, oder einfacher noch, „die Zentralbank“ doch bitte zu tun, oder zu lassen habe.

It translates as: And we would have gotten away with it too if it hadn't been for you pesky bloggers. And professors.

Not in Cavan anymore

One of the stranger juxtapositions (see signpost) near the scene of the Empire State building area shooting in Manhattan today.

Photo: Getty Images via Wall Street Journal.

Since Julian Assange is fishing for causes

He could add to his list of free speech grievances that Samir Nasri was booked for his end of Ramadan festival (Eid) greeting to the Islamic world after he scored the winner in Manchester today.

Photo: Phil Noble, Reuters.

That Julian Assange embassy balcony speech in full

Assange:  The following people are to be released from their captors: In Northern Ireland, the seven members of the New Provo Front. In Canada, the five imprisoned leaders of Liberte de Quebec. In Sri Lanka, the nine members of the Asian Dawn movement.

Crowd/media: What the f***? 

Embassy staffer: Asian Dawn?

Assange: I read about them in Time magazine. 

[Actual source for the above quote. And if you really are seeking a transcript, it looks like Russia Today is taking time out from Syrian propaganda to get a copy]

Don't mention the war

Saudi King Abdullah shakes hands with Iranian President Mahmoud Ahmadinejad at the Islamic Solidarity Summit in Jeddah -- even as they scheme against each other via a proxy war in Syria.

Photo: Saudi Press Agency.

Germany still makes stuff

This New York Times photograph tells a story, or at least can have a story projected upon it. It's of two workers at a specialized valve factory in Frankfurt. The business is doing well and one reason it does well is because of the Euro -- many of its customers are abroad so it's a small business that benefits from the advantage of a common and/or "competitive" currency. But anyway, about the photo: two men, black t-shirts, one sleeveless, tattoos, earrings, tough-looking individuals. In any other country, they'd be typecast as "working class" with all those connotations. But it's Germany. They have a manual skill that's needed in a small business that's making money. So their entire life trajectory and prospects are different from what the class term implies.

Meanwhile, Mitt Romney is popping up next to workers in overalls claiming that he's going to make their lives better, but that Europe is not the way to do it. 

The poor are revolting

Tenured professor of economics at Harvard University, Robert Barro, writing in the Wall Street Journal --

And, more specifically, the Obama administration's weakening of individual incentives to work and produce by its sharp expansion of transfer payments can be reasonably viewed as retarding the U.S. economic recovery since the end of the recession in 2009.

We're going to need a deeper recession

Stephen Moore writes in the Wall Street Journal about Paul Ryan --

At what is now the explicit Romney-Ryan target of 4% annual growth, deficit reduction and fiscal stability would be achievable, and with much less pain and suffering. When I recently asked Mr. Ryan whether 4% growth was reasonable, he responded: "It should be easy. Under Reagan we had growth rates of 7% and even 8%."

Reagan's Presidency had a single year of growth in that range -- 1984, after a brutal double-dip recession. Only Bill Clinton's years achieved the kind of growth that Ryan wants without a plunge at the start (Reagan) and/or the end (Bush). 

Paul Ryan

There won't be a shortage of examples of what Mitt Romney has gotten into by picking Paul Ryan as his running mate. Here's one that we meant to note at the time, it's from a Ryan opinion article in the Financial Times last month:

Both political parties have fallen victim to “partnership” with large and well-connected companies, especially in energy, housing, finance and healthcare.

What rather significant chunk of government purchases from large private companies is missing from that list of sectors?

Incidentally, we also want to suggest a logo for the Romney-Ryan campaign.

UPDATE: With reference to our question above, it's worth noting that the announcement is being made in a naval base town, Norfolk Va., before an audience heavily populated with veterans. And going for the Irish ancestry as a working class credential, Governor Bob McDonnell doing the introductions referred to his grandfather from "Mayo County, Ireland."

The New Journalism

Is there any news outlet that did a story on American television network NBC not showing the men's 100m live which did not involve screen shots of tweets complaining that NBC did not show the men's 100m live?

Rats, ship, sinking

Moscow Times --

Russian flag carrier Aeroflot suspended all flights to war-torn Syria on Monday, citing commercial considerations. Aeroflot flights from the Syrian capital, Damascus, to its Moscow hub at Sheremetyevo Airport have been overbooked, while return flights have been practically empty, an unidentified Aeroflot spokesman told RIA-Novosti.

Once a Vampire Squid, always a Vampire Squid

Wall Street Journal article on the scramble to save the Knight Capital brokerage --

Goldman Sachs Group Inc. agreed to buy the [erroneously purchased] stock in a bulk lot at a discount, causing Knight to record a loss on the deal.

That loss was $440 million.

Then again, as the firm's staff said to the themselves over the disastrous weekend arising from a software-induced trading error, it was all the fault of "One line of code."

The partition of time

It's 40 years to the day since the bombing of Claudy in County Derry in which 9 people were killed. The method of attack -- multiple bombs in different locations in a compact village -- make it a precursor to similar and larger attacks in Ireland and elsewhere later. No one has ever been charged with the attack. The anniversary was the lead story on BBC Northern Ireland lunchtime news. On the equivalent broadcast of RTE -- the all-economic-crisis-all-the-time outlet -- it doesn't rate a mention.

The Israelites took a wrong turn

Cyprus and Israel are so close geographically yet Cyprus is significantly richer. Over to you, Mitt Romney.

Sackcloth and ashes still needed

It's not just in the area of economics where Ireland seems to have reputational issues after the smugness of the Tiger years:

RTE -- The Olympic Council of Ireland is investigating an allegation that an Irish competitor at the London Games previously bet on an opponent to win an event in which they were both competing. A spokesman said the council has informed the athlete, whom it will not name, about an anonymous allegation that two bets were made in favour of an opponent in an unspecified sport prior to the Olympics.

Note: Ireland's sporting administrative elite could use a dose of humility.

They were probably Barclays seats

BBC -- Olympic organisers are investigating why many seats were empty during events at venues including the Aquatic Centre in east London. The BBC's Nick Hope said areas high in the stands at the sold-out event were full but several hundred more expensive seats lower down were not filled. Locog said some accredited seats - for press and media - were empty. 

Don't touch my bag if you please Mr Customs Man

One of these is banned in the USA, and one isn't. One has a dangerous insect inside, and one has a large plastic cylinder which must be popped open by an older person to find the makings of a little toy. Yes, it's the latter -- a Kinder Surprise egg -- which is treated like the latest creation of al Qaeda in the Arabian Peninsula at US airports, and the former -- Scorpion Candy -- which is widely available at those same airports. [latest Kinder Surprise outrage via Gawker]

We're all on need-to-know basis

Actual headline on this Wall Street Journal story: Bank of England's King sets meeting to review LIBOR

What it should be: Mervyn King proposes closed-door meeting in Switzerland in 2 months to improve confidence in LIBOR

What Barclays got right

One Barclays employee anyway. In the New York Fed's Friday document dump of their Mm Hmm conversations with the bank about LIBOR, there's an interesting segment from the 10 October 2008 conversation:

Now, with stock markets dropping, you know 10%, 10%, this is people's pensions and things. You know we saw the thing with the Iceland, well. The UK banks, well the UK savers in Iceland, that, that crystallises people's thoughts, and so I think that we're sort of reaching a new stage in the game whereby the CPFF is really good but, not sure it goes far enough, it just gets you back to where you were in August ... So, I think, getting us back to where we were in August isn't really, is, don't get me wrong, it's incredibly useful, but I'm just wondering whether we need to be got back to August plus a bit. The UK guarantee to banks, again, it's a very, very positive thing but, a bit like the CPFF, no-one really knows the details, it's going to take several weeks to get off the ground, everyone is going to examine the guarantee and it's going to take a bit of time for things to start working there. So, again, that's sort of work-in-progress but that is very good news but... you know, the rumour came out that, you know, G8 were going to guarantee all bank deposits, and, you know that's ... What I think, and I know central banks don't like doing this, my view is that, everyone's talking about, "You've got to get into bank lending happening again." I don't think that's necessarily the important thing. I think the important thing is to get banks lending to the consumer ... to Joe Public so I think the way you do that, is you either do things like increase CPFF or you just um, do something similar, like just buying bank term CDs ... But I know central banks don't like doing that. But it's getting to the stage where everytime you and I think you guys tried to be ahead of the curve in the States, er everytime you throw the kitchen sink at the problem, it needs another sink and then another sink. Then there's euphoria for half a day then something else happens and the market plunges, something else has to happen, the the market plunges. It's almost as if, you know, you've got to be totally radical now ... Ahh, because otherwise I had a fit of pessimism a couple of days ago. I think it was the day after RBS got downgraded when there was mayhem in the market and urn I was thinking, you know, this is potential civil strife here because the banking system is just going to break down.

The Barclays employee understood better than his superiors or regulators what a perilous phase the financial sector was at in terms not just of its own crisis, but of its perception with the public. But somehow the backlash didn't happen till 4 years later. But the accumulating disdain could not be put off forever. Much like the more specific LIBOR concerns, it's not clear what the people in the trading rooms knew was travelling upstairs.

Ignore that $11 million pile of cash in the corner

For about a week now there's been a story doing the rounds in the Arabic media that Bahraini customs officials had seized US$11 million in cash being carried by an unidentified American at the country's airport. After various Move Along Folks statements, the government of Bahrain is now out with a complete explanation:

... the Central Bank of Bahrain received a letter on 19 June 2012 from the US Government requesting the entry of the money in order to pay the salaries of US servicemen stationed in Bahrain and other locations in the Gulf ... Typically, such amounts enter Bahrain through an authorized money exchange office. On 12 July 2012, the American Embassy still had not received approval for the entry of the money. Embassy officials contacted the Foreign Ministry to notify them that the money was scheduled to arrive on a military airplane that was to land in an allocated military zone at the Bahrain International Airport.When the carriers of the money arrived they notified customs officials that they were carrying $11 million. The customs officials asked them to provide all of the documents and identifications related to the transfer. The money was held by the customs agents until entry approval was obtained by the Foreign Ministry. Once approval was received and all proper procedures had been followed, the money was released to the carriers.

Well, OK, but ... Bahrain has banks and currency exchanges and its currency is pegged to the dollar so it's not like there's some difficulty in wiring $11 million to the country. So why the need for cash? Lots of it. In the Gulf. A hop, skip, and jump from Iran and pirates and al Qaeda and all sorts of other stuff.

Nope, nothing to see here folks.

Mitt Romney, passive entrepreneur

Mitt Romney is strangely insistent that he had no active management role in Bain Capital after 1999. Mitt Romney is strangely insistent that no one is getting to see his tax returns prior to 2010. Even though the former date is associated with the row about Bain Capital's job creation numbers, it would be irresponsible not to speculate that there is a close link between the Bain Capital departure date and the reticence about taxes.

Specifically: did Mitt pay self-employment tax on his Bain Capital income after 1999? If he was claiming to be a passive owner, as apparently he was, he wasn't liable for this tax. But any inkling that he still had an operational role in the firm would be tricky. By Mitt's standards, it's not even that much money given the cap on social security taxes. But it would be embarrassing for a party beholden to the cult of the entrepreneur to have its standard bearer someone who dodged a specific tax on that group. Incidentally, there have been issues before with Mitt's exact knowledge of this tax.

It all averages out

From the New York Fed's summer Friday afternoon document dump on the LIBOR scandal, a 24 October 2008 conversation between a Barclays money market trader and the NY Fed markets desk --

I [Barclays trader] think people are afraid to be seen as being having, I mean if they have a high libor the market automatically assumes they're paying too much, but in a perverse kind of way if you put a low libor, it's almost as if the market knows that you're scared to put where you really think it is. I mean, I know that I'm consistently high, but I think I'm consistently correct.

They know who they are

David Brooks taking on Chris Hayes in his New York Times perch: 

The problem is that today’s meritocratic elites cannot admit to themselves that they are elites. Everybody thinks they are countercultural rebels, insurgents against the true establishment, which is always somewhere else.

Across the page, Paul Krugman:

"Is there a V.I.P. entrance? We are V.I.P." That remark, by a donor waiting to get in to one of Mitt Romney’s recent fund-raisers in the Hamptons, pretty much sums up the attitude of America’s wealthy elite.

Don't drive on your drink

Saudi Customs authorities displaying bottles of what looks like whisky that were hidden inside seemingly new tires. Photo via Saudi Press Agency.

Why the LIBOR rigging had no impact whatsoever

As a service to humankind, this blog is making available at no charge to everyone an argument that will save hundreds of millions of pounds in legal and consulting fees concerning the LIBOR rigging scandal. This argument required countless hours to develop and involved the use of highly sophisticated computer technology, as seen in the diagram above. Yet through the use of advanced concepts not unrelated to those used to search for the Higgs boson, we have conclusively shown that the alleged rigging of reported LIBOR by the various banks was irrelevant. The logic is as follows.

Everyone says that the scandal comes from the fact that the interest rates in other loan markets were set as LIBOR plus a spread, therefore if LIBOR was understated or overstated, the rates in those other markets must have been affected as well. Picking one hypothetical other market, let i stand for the interest rate in that market, L the quantity of loans, S the supply of loans, and D the demand for loans. Through the miracle of economics, that market has an equilibrium interest rate and quantity of loans denoted i* and L*.

Now here's the thing: you can break up that i* into any sets of numbers that add up to it, but through the aforementioned miracle of economics, there's only one interest that brings about equilibrium in that market. Unless you've got some reason why the process for reporting LIBOR affected S and D, there's no reason why the interest rate should have changed. So if LIBOR was off by 1 percentage point, then somewhere along the chain the equilibrium will involve adding 1 percent to keep the market where it was before, as illustrated by our highly complex equation below the diagram which relies on the deep mathematical property that 1-1=0.

OK, do we actually believe this? We're not sure, but it would advance the argument if this was taken as the baseline position.

Would the Republic of Ireland participate in a Tory referendum on UK EU membership?

At first it sounds crazy: if this or a future Tory government in the UK was to put EU membership to a referendum, as they are under increasing pressure to do, the voting base would surely just be the United Kingdom. But in the House of Commons yesterday, David Cameron had to be reminded of his sloppiness even on that point:

Kate Hoey (Vauxhall) (Lab): May I simply ask the Prime Minister to look at his terminology? In his statement, he mentioned Britain 12 times; he did not mention the United Kingdom once. Does he agree that if there is to be a referendum, which I think is inevitable, the people of Northern Ireland should have a very strong say? He must, in the European Council, refer to the United Kingdom, or the UK for short; saying “Britain” excludes Northern Ireland.


The Prime Minister: As ever, the hon. Lady is right about almost everything, and I am rightly chastised.

So anyway, there would have to be a referendum in Northern Ireland as part of the exercise. Now here's where things get tricky. The Good Friday Agreement between the UK and the Republic of Ireland contains the following text:

The two Governments: (i) recognise the legitimacy of whatever choice is freely exercised by a majority of the people of Northern Ireland with regard to its status, whether they prefer to continue to support the Union with Great Britain or a sovereign united Ireland; (ii) recognise that it is for the people of the island of Ireland alone, by agreement between the two parts respectively and without external impediment, to exercise their right of self-determination on the basis of consent, freely and concurrently given, North and South, to bring about a united Ireland, if that is their wish, accepting that this right must be achieved and exercised with and subject to the agreement and consent of a majority of the people of Northern Ireland;

Could not the Irish government argue that a referendum on the question of Northern Ireland leaving the EU with the UK has outcomes so inimical to a united Ireland that under the treaty, the Republic would have to be consulted through an all-Ireland referendum on the question?

He's walking the walk

Everyone has their theories and interpretations about why United States Supreme Court Chief Justice John Roberts voted to uphold the Affordable Care Act, aka ObamneyCare. Here's another.

After he was appointed to the court, he was diagnosed with epilepsy. He'd had a seizure years ago and then had another one during his term. Long medical story short, 2 seizures = epilepsy.

As a result, he may have had time to contemplate what life is like outside a well-regulated public sector health insurance plan for those with pre-existing conditions. An epilepsy diagnosis can pose big problems in the private insurance market. That's a much more plausible theory than the one about his medicine being the problem.