What I'm Reading

"If we look at Europe with Latin American lenses, we realize that the Eurozone is ... a bunch of over-indebted countries with their currency pegged to, of all the economies of the world, Germany."

"The last thing the West wants is to help potential competitors develop in the way that it has developed itself ... The strategy is for global conglomerates to buy up property (with tax-deductible credit), while European banks extend loans to fuel debt bubbles. This policy has left the Baltics and other post-Soviet countries economically dependent beyond their ability to pay down the debts they have run up so rapidly over the past decade."

"The success of the [Jobbik] party, which has railed against “Gypsy crime” and Jews, threatens to tarnish Hungary’s international image ... Some economists fear that the growing influence of Jobbik, which wants to eliminate tax rules favoring foreign companies, could undermine the country’s economic recovery by alienating already jittery investors, spooking credit agencies and making it harder for the country’s next prime minister to shepherd the economy."

"This hostility to universal citizenship is, I submit, the main characteristic of fascism. And the rejection of even a tempered universalism is what we now see repeated under democratic circumstances."

Facing the presence of the past

There is no explanation of how each of the detainees, much less all three, could have done the following: braided a noose by tearing up his sheets and/or clothing, made a mannequin of himself so it would appear to the guards he was asleep in his cell, hung sheets to block vision into the cell—a violation of Standard Operating Procedures, tied his feet together, tied his hands together, hung the noose from the metal mesh of the cell wall and/or ceiling, climbed up on to the sink, put the noose around his neck and released his weight to result in death by strangulation, hanged until dead and hung for at least two hours completely unnoticed by guards.

The Economist's Democracy in America blog has more more details:

All three men were found to have rags inserted in their throats to a point where it would have impeded breathing. The camp commander, after first ordering guards to make sworn statements, retracted his order and forbade them to make sworn statements, instead holding a group meeting that appears to have been intended to get their stories straight. And these are just some of the most glaring inconsistencies; there's much, much more in the report.

How do you deal with the aftermath of war crimes, murder, torture? In most countries, for most people, the answer is simple: pretend such things ever happened. It's even easier if you won the war, or have an enemy whose own atrocities you can focus on. McNamara describes the firebombing of Tokyo he helped plan, long before Vietnam: "In a single night we burned to death a hundred thousand Japanese civilians – men, women and children." It's hard to believe that these actions have no consequences, no impact: the the people who ordered such actions don't disappear from government, the people who executed the orders eventually go home to their families.

Of course, Japan lost their war, and were both perpetrators and victims on a vast scale. So maybe it's not surprising that Japanese culture has created shows like Full Metal Alchemist: Brotherhood whose themes would be unimaginable in the US. It's completely horrifying... and one of the best shows on TV today (far better than the first series).

A historical moment

I can't decide which is worse: Obama winning the Nobel Prize for being less of a jerk than that other guy, or the Washington Post noting that the "Twitterati appear perplexed by [the] selection" (on the front page of the website, no less). It appears we've entered an age of lowered expectations, where not being completely incompetent is astonishing, and trivial thoughts even I can come up with win you that the most prestigious of suffixes, -ati.

Phase change

Imagine you're driving on a crowded highway. In theory, speed doesn't matter as long as everyone drives at the same speed. But at some point, a car will slow down because of a road bump, or a moment of distraction. The car behind it will need to react. At 10MPH, this is not a problem. At 100MPH, on a crowded highway, the result is disaster: reaction times are too slow, drivers overreact, and suddenly the fast flowing traffic crashes to a halt.

What is true of traffic is also true of the economy: like speeding on a crowded highway, too much consumer and corporate debt is unsustainable. If A owes B money who owes C money who owes D (and so on), in theory it all cancels out. But if B can't pay, C now needs to find some money to pay D; if the level if debt is too high, a damaging chain reaction occurs. Irving Fisher, who in 1929 declared that "stock prices have reached what looks like a permanently high plateau," later recognized that the plateau was really the edge of a cliff of debt:

Assuming, accordingly, that, at some point of time, a state of over-indebtedness exists, this will tend to lead to liquidation, through the alarm either of debtors or creditors or both. Then we may deduce the following chain of consequences in nine links:

1. Debt liquidation leads to distress selling and to
2. Contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity of circulation. This contraction of deposits and of their velocity, precipitated by distress selling, causes
3. A fall in the level of prices, in other words, a swelling of the dollar. Assuming, as above stated, that this fall of prices is not interfered with by reflation or otherwise, there must be
4. A still greater fall in the net worths of business, precipitating bankruptcies and
5. A like fall in profits, which in a "capitalistic," that is, a private-profit society, leads the concerns which are running at a loss to make
6. A reduction in output, in trade and in employment of labor. These losses, bankruptcies and unemployment, lead to
7. pessimism and loss of confidence, which in turn lead to
8. Hoarding and slowing down still more the velocity of circulation.

The above eight changes cause

9. Complicated disturbances in the rates of interest, in particular, a fall in the nominal, or money, rates and a rise in the real, or commodity, rates of interest.

The need to repay debt causes distress selling of assets and less spending by indebted consumers and companies, which reduce prices, and therefore profits, leading to unemployment... and to even more fire sales and even less consumption in order to pay off debt. The more effort is put into paying off debt, the worse the economy does, and the harder it is to pay off debt. Noticed falling house prices recently?

Consider the following graph, US total debt to GDP ratio (keeping in mind that data before 1950 or so is less accurate). Notice where were in 1929, and where we are now:



If we really are in a debt deflation, then things are not going to get better anytime soon.

Numbers

427: number of books I have borrowed from the library over the past [three]four years. I read most, but not all. I have also bought some unknown number of books.

[$1300]$1000: minimum amount of money the library saves me each year.

237: number of books on my "want to read" list (I use Amazon to track these).

I'd count the number of books on the floor of my room, but that would be both difficult and embarrassing.

Notes from the Future

Actually, notes from Japan. Update: and a counterpoint.

Random links

Shorthand and alternate writing systems

Grid Beam: like Lego for the real world