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December 26, 2011
The Sack of Rome
The WSJ describes the complex scams governments are using to just hand money over to banks without going through democratic considerations. Of course at each step along the way transactions can be inflated to benefit banks. Incredibly these privatizations (and that’s what they are) can be securitized, and pledged as collateral to borrow from the ECB. This explains why a Goldman Sachs crony has taken over in Italy. We are at peak loot.
WSJ:
December 22, 2011
December 20, 2011
What to do when leaving the Eurozone!
What if a country had to leave the euro
zone?
It would need to do the following:
It would need to do the following:
- Announce and immediately impose capital controls
- Impose immediate trade controls (because companies would otherwise falsify imports in order to get their money out)
- Impose immediate border controls (to prevent a flight of cash)
- Implement a bank holiday (to stop citizens from withdrawing their money and running before the devaluation) and - although this is somewhat hard to imagine - stamp every euro note in the country, converting it back to the national currency.
- Announce a new exchange rate (presumably not floating at the beginning, given capital and exchange controls) so that trade could continue.
- Decide how to deal with existing outstanding euro-denominated debt, which would probably entail a major government and private-sector debt restructuring (that is, default). This might be easier in the case of government debt, which tends to be governed by domestic law, in contrast to the debt of major corporations, which normally governed by UK law (but we would assume enactment of laws declaring a haircut here, as well).
- Recapitalize the (insolvent) banks to make up for losses from defaults
- Determine what to do with the non-bank financial sector, the stock and bond markets, and every company account and commercial contract in the country.
Any break up would lead to significant turbulence in financial markets - just think about the number of CDS outstanding - and a worldwide recession. The OECD has warned that a breakup of the euro zone would lead to 'massive wealth destruction, bankruptcies, and a collapse in confidence in European integration and cooperation,' leading to 'a deep depression in both the existing and remaining euro area countries as well as in the world economy.' The chart above describes a breakup scenario and its potential implications.
December 19, 2011
December 14, 2011
Best of TED - Luis von Ahn: Massive-scale online collaboration
For those of us who really hate Captcha, worth watching how this annoying feature is now improving the world. After re-purposing CAPTCHA so each human-typed response helps digitize books, Luis von Ahn wondered how else to use small contributions by many on the Internet
for greater good. At TEDxCMU, he shares how his ambitious new project,
Duolingo, will help millions learn a new language while translating the
Web quickly and accurately — all for free.
Best of TED: Charlie Todd - The Shared Experience
Charlie Todd causes bizarre, hilarious, and unexpected public scenes:
Seventy synchronized dancers in storefront windows, "ghostbusters"
running through the New York Public Library, and the annual no-pants
subway ride. He shows how his group, Improv
Everywhere, uses these scenes to bring people together.
Italy staggering business malpractices
The following charts from the Telegraph illustrate
how regulations and poor administration have held back Portugal,
Ireland, Italy, Greece and Spain's economies, using data from the Doing
Business project, which carried out by the World Bank, measures the time
and cost of common business activities.
The
charts compare eight European Union (EU) countries (Italy, Greece,
Portugal, UK, Germany, France, Ireland, Spain) and the United States, in
terms of days it takes to
- get construction permits,
- get commercial electricity connected,
- enforce commercial contracts
- export goods
Overall,
the United States leads with an average of 100 days to carry out
business in the above categories whereas it take 420 days in Italy.
(See Graph Below)
One glaring example is contract enforcement.
Contracting
is an essential and integral part of transacting business and
contributing to a country's economic growth. Enforcing a contract takes
about 9 months, which is not that great, yet it takes more than two
years to enforce a contract in Greece, and more than three years in
Italy.
One
interesting statistics is that the U.S. leads the pact in getting
construction permit in less than a month, which probably partly
explained the housing bubble. The same process takes more than 8 months
in Italy and Portugal to get a construction permit.
Another
example is that while it takes 17 days to get commercial electricity
connected in Germany, and more than two months in the US (which is bad
enough), the same task takes over six months in Ireland and Italy.
Exporting and importing a standardized cargo
of goods by ocean transport also takes longer in Italy, Portugal and
Greece compared to other European countries as well as the the U.S.
Telegraph also pointed out that it takes nearly three years to resolve a
commercial dispute, compared to a year in Germany and France due to
Italy's highly bureaucratic judicial system,.
Chart Source: The Telegraph, 21 Nov. 2011
Top Tax Evaders
British accountant Richard Murphy estimates global tax evasion at 5% of
the global economy. He found the following ten countries to have the
largest absolute levels of evasion.
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