dkf
dkf's JournalAusterity, Social Unrest, And Europe's 'Lose-Lose' Proposition
The link between government spending cuts and social unrest is highly non-linear and extremely troublesome. We first noted the must-read quantification of the relationship between so-called CHAOS of social unrest and spending cuts back in early January and this brief lecture reiterates some of the frightening conclusions. Critically, small spending cuts impact social unrest in very marginal ways but once the cuts begin to rise to 2-3% of GDP then the probability of considerable and painful social unrest becomes much higher. As Hans-Joachim Voth points out in this INET lecture, analogizing between a burning cigarette as a catalyst for a forest fire in an arid landscape, he suggests the rapid build up of combustible material caused by austerity (youth unemployment in Spain perhaps?) could be inflamed by a seemingly small catalyst that would otherwise be ignored in general (a poor immigrant being shot or motorist murdered in a bad part of town) when spending cuts are at the extremes we see across Europe currently. The frightening reality of the non-economic, real social costs of the Troika's handiwork look set to be tested going forward as the link between periods of very heavy unrest (clusters of rioting for instance) and austerity is very strong. His findings on the post-chaos fiscal policies, (what does the government do once social unrest explodes) are perhaps more worrisome in that governments will immediately withdraw from austerity patterns which leads to some tough game-theoretical perspectives on the endgame in Europe in a 'lose-lose proposition' for austerity as the uncertainty shock of these events cause dramatic drops in Industrial Production.
http://www.zerohedge.com/news/austerity-social-unrest-and-europes-lose-lose-proposition
JPMorgan recently noted this study:
The authors tested to see if results varied with ethnic fragmentation, inflation, penetration of mass media and the quality of government institutions; they did not. Results are also consistent across time, covering interwar and postwar periods.
The independent variable that did result in more unrest: higher levels of government debt in the first place.
Compounding the problem is the way some decisions are being taken, which may reinforce perceptions of a "democratic deficit" at the EU level, an issue highlighted by Germany’s Constitutional Court. It remains to be seen if Europe can sustain cohesion around its path of most resistance. One sign of rising tensions: the following (staggering) comment by the head of the Bank of France: "A downgrade does not appear to me to be justified when considering economic fundamentals," Noyer said. "Otherwise, they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping." At a time of increasing budgetary pressures and declining growth, I suppose there are limits to European solidarity.
http://www.zerohedge.com/news/austerity-unrest-and-quantifying-chaos
The "Buffett Rule" In Perspective
As a reminder, as we pointed out yesterday, the US just posted the largest ever March budget deficit in history of nearly $200 billion, which followed the single largest monthly budget deficit on record of $232 billion. Keep those numbers in mind, because they frame, in a very, very, very aggressive case, the bottom and top range of what the entire Buffett Rule would offset in terms of gained revenue. As rick explains, assuming one taxes an upper estimate of those eligible for the Buffett Rule (indicatively 225,000 people but realistically far less) an incremental $1 million, the offset would be $225 billion over the proposal's life. Which is not enough to even plug one month of US deficit. And that is what all the posturing is about.
Now don't get us wrong: America has a record deficit problem, and it will require both revenue and spending decisions to fix it, but in isolation, neither will make a dent, and with the government as bloated as it is, far more spending cuts will be required to match any revenue increases.
http://www.zerohedge.com/news/buffett-rule-perspective
Bernanke to Congress: We're Much Closer to Total Destruction Than You Think
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Ben Bernanke
Official Congressional budget estimates understate the peril of rising debt, Fed chair Ben Bernanke told the Budget Committee on Capitol Hill today.
Warning that our nation's fiscal health has deteriorated appreciably since the onset of the financial crisis and the recession, Bernanke called upon lawmakers to confront the long term fiscal challenges sooner rather than later. If lawmakers don't confront them, they'll find themselves confronted by them.
From Bernanke's prepared remarks:
By definition, the unsustainable trajectories of deficits and debt that the CBO outlines cannot actually happen, because creditors would never be willing to lend to a government with debt, relative to national income, that is rising without limit. One way or the other, fiscal adjustments sufficient to stabilize the federal budget must occur at some point. The question is whether these adjustments will take place through a careful and deliberative process that weighs priorities and gives people adequate time to adjust to changes in government programs or tax policies, or whether the needed fiscal adjustments will come as a rapid and painful response to a looming or actual fiscal crisis.
Bernanke explained that the Congressional Budget Office's calculations miss an important reality. As the government's debt and deficits rise, the economy will slow down—an effect not taken into account by the CBO. So, for instance, when the CBO says that federal spending for health-care programs will roughly double as a percentage of GDP in the next 25 years, it is probably being too optimistic. If debt keeps, rising, GDP will be much lower than the CBO estimates—which will mean that health care spending will be a much larger percentage of the overall economy.
http://www.cnbc.com/id/41491193
Hillary Boomlet Hits New Gear As ‘Texts From Hillary’ Explodes
BENJY SARLIN APRIL 9, 2012, 5:56 AM 11811
What a difference four years makes: When she was running for the Democratic presidential nomination, Hillary Clinton was parodied as drab and calculated, especially compared with young and vigorous Barack Obama and winking and fresh-faced Sarah Palin. Now, she’s fueling Internet jokes based on her own brand of badass cool.
More than just an image rebound, Clinton is enjoying a genuine resurgence.
Her 2008 campaign, which once seemed a cautionary tale about hubris, looks at least somewhat better with age. Obama touted a unifying national message in his run against Clinton, suggesting that Clinton’s scars from decades of battling Republicans would make it difficult to ever be effective in the White House.
Now Obama’s post-partisan vision has given way to a tough dogfight of a general election in which he’s running against the intransigent Republican party’s “thinly veiled social Darwinism.” And Clinton’s popularity — including with Republicans — has never been higher, prompting yet another boomlet of interest in a 2016 presidential run.
http://2012.talkingpointsmemo.com/2012/04/the-hillary-clinton-boomlet-hits-high-gear.php?ref=fpa
If/when they arrest George Zimmerman they must bring him to trial within 175 days.
Police can and do arrest suspects without probable cause, but judges must then order their release from jail. Senior Judge O.H. Eaton Jr. said that happened at least once or twice every weekend he was on jail duty reviewing Seminole County arrests for the previous 24 hours.
When that happens, police can rearrest the suspect, and prosecutors are free to file charges. But they must bring the case to trial within 175 days of arrest, according to Florida rules of criminal procedure.
That ticking clock is often an incentive for prosecutors to hold off on an arrest, they said. It gives them more time to collect evidence — for example, to get ballistics tests done if a gun is involved or to have fingerprints analyzed.
Prosecutors almost always demand more evidence than cops.
Though an officer needs only probable cause to make an arrest, prosecutors typically want enough evidence for a conviction — enough to convince a jury beyond every reasonable doubt that the suspect is guilty.
http://www.palmbeachpost.com/news/the-search-for-probable-cause-against-george-zimmerman-2284653.html
Trayvon Martin case: What is difference between manslaughter and murder charges?
As spelled out in Florida Statute 782.07, manslaughter is a killing caused by an individual's "culpable negligence."
What is culpable negligence?
"You've got to do something really stupid," said William Orth, a Longwood lawyer and former Seminole County prosecutor, "…something that you and I as intelligent humans — adults — know, 'Don't do that. Somebody could get hurt.' "
It requires a suspect to be much more than negligent, lawyers say. It requires him to show a gross disregard for the safety of others.
In Trayvon's case, prosecutors would have to prove Zimmerman was wanton and reckless, according to the set of jury instructions that all Florida judges read aloud before sending jurors to begin deliberations in manslaughter cases.
If Zimmerman was the aggressor and provoked the fight, that might be manslaughter, said Orlando defense attorney Diana Tennis.
http://articles.orlandosentinel.com/2012-03-31/news/os-trayvon-martin-manslaughter-20120331_1_manslaughter-longwood-lawyer-criminal-defense-lawyer
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Behind the photos of the Trayvon Martin case
http://www.chicagotribune.com/videogallery/69125947/News/Behind-the-photos-of-the-Trayvon-Martin-caseApparently the most iconic photos we've been shown of Trayvon Martin and George Zimmerman are both several years old.
Fast food, processed food, and our addiction to subsidized corn and sugar are killing us.
The fact that having surgery to restrict people's stomach sizes works tells me that eating less is key but that people simply have no willpower.
Problem with the ACA: they called it a penalty, not a tax.
Interesting analysis from Major Garrett on hardball earlier. He said the house bill called the consequence of not having health insurance a tax but the Senate wanted to call it a penalty and the White House made a political decision to go with the Senate language. That is what made it fall afoul of the constitution. If they had called it a tax they should have been ok because congress has the authority to tax.
Dudley Sees ‘High Bar’ to MORE Fed Purchases of European Debt
By Cheyenne Hopkins
March 27, 2012 11:26 AM EDT
Federal Reserve Bank of New York President William Dudley said that the central bank holds a very small amount of European sovereign debt and that he sees a “high bar” to additional purchases.
The standard for buying more European sovereign debt “is extraordinarily high for the U.S., for the Federal Reserve, to actually go out and buy foreign sovereign debt for its own portfolio, apart from the very small foreign exchange holdings that we have,” Dudley said today to a House Financial Services subcommittee hearing.
http://mobile.bloomberg.com/news/2012-03-27/dudley-sees-high-bar-to-more-fed-purchases-of-european-debt.html
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