Saturday, March 20, 2010


Mmm… not quite, Capo.

With the Euro at $1,35 +/- $0.02, real value, or in this case Euro overvaluation can be found in Purchasing Power Parity, explained simply thus:
The Euro corrected lower in December but remains significantly overvalued against the US Dollar with prices still over 20% above the PPP-implied “fair” exchange rate. The single was the second-worst performing currency against the greenback last month while the spread between 1-year priced-in interest rate expectations for the Federal Reserve and ECB as narrowed substantially as US data took on a firmer tone, suggesting both momentum and yield considerations are supportive of further losses. The critical thing to keep watch out for as 2010 gets going will be whether the market will return to a risk vs. safety dichotomy that characterized much of the previous year or extend the shift towards a focus on economic fundamentals that began to take root towards the final weeks of 2009. The former scenario would offer some support to the single currency, while the latter would allow for continued weakness. On balance, our bias remains bearish.

What is Purchasing Power Parity?

One of the oldest and most basic fundamental approaches to determining the “fair” exchange rate of one currency to another relies on the concept of Purchasing Power Parity. This approach says that an identical product should cost the same from one country to another, with the only difference in the price tag accounted for by the exchange rate. For example, if a pencil costs €1 in Europe and $1.20 in the US, the “fair” EURUSD exchange rate should be 1.20. For our purposes, we will use the PPP values provided annually by Bloomberg. We compare these values to current market rates to determine how much each currency is under- or over-valued against the US Dollar.
While the Euro has been flying to as high as $1,65, PPP has been consistent at a range of $1,10 - $1,13. The difference is the extent to which Euro-zone occupants are being screwed more than Americans by taxation, cronyism, and “Syndicalism”.

The irony of all of this is that while the Euro rises, the population doesn’t benefit. Not only has it the effect of flattening exports, it costs more and more in Euros to budget what’s expressed in that $1,13 of parity. The money has to leave the Euro-zone and go just about anywhere in the world to get a parity advantage.

Note too: keep an eye out for all of these issues on 19-March and slightly before. It’s the date some Greek government debt comes due, and the auctions will reveal much of what could underlie the coming weeks and months.

Friday, March 19, 2010

The Song Remains the Same

German Communist Party Propaganda from 1954:

The Lie of the “European Defense Community”

There are 32 states in Europe, of which only 5 ½ will be members of this so-called defensive community. It cannot, therefore, be called “European.” The Americans behind the EDC do not want to defend Europe, but rather only their own greedy plans aimed against the security of all the peoples of Europe. The EDC is a community of monopolists and militarists opposing Europe’s security and peace! The peoples can never build a community with monopolists and militarists!

Europe’s security can be assured only when resurgent German militarism is eliminated, when the idea of collective security for all the European peoples replaces the aggressive EDC, which is what the Soviet delegation proposed at the Berlin conference of foreign ministers!
Graduate level gibberish for credit, 2004. By a PhD candidate at the University of Geneva and in International Affairs at the J.F.K. School of Government, Harvard University:
How does a hegemon behave in a unipolar world? How does the unipolar world structure affect the hegemon and provides it with incentives to act in different ways? This paper tries to answer these questions by testing various theories of international politics against the historical record of American behaviour since the end of the Cold War. In order to fulfil this goal I will draw on the case of the European security “architecture” since the early 1990’s. Why did the hegemon try by all means to undermine every single attempt to create some form of “autonomous” European security and defense policy, although the end of the Cold War represents a unique opportunity since the failure of the EDC in 1954 to pursue a strategy of offshore balancing? The answer to this question lies in the peculiar distribution of power resulting from the demise of the Soviet Union and the effect it had on the hegemon’s grand strategy.
I’m sure he means ‘hegemon’ in only the nicest way.
My chief goal in this article is to provide a power-based theory of unipolarity and by examining the post-Cold War European security architecture, to demonstrate that unipolarity provides not only incentives for power maximization strategies, but that my theory offers a better explanation than alternative existing ones. My argument unfolds as follows: Unipolarity provides the hegemon with incentives to pursue power-maximizing strategies. Simply put the United States opposed an “autonomous” European security architecture because the only remaining threat on the European continent is a strong, autonomous politically and militarily integrated European Union. Pushing for an autonomous “EU force” would mean creating a buck catcher that could, in the long run turn, into a peer competitor. Structural constraints do not provide the hegemon with incentives to pursue such a strategy.
As bad as a partner as they are, what makes this guy think that Europeans could be peer competators, or that it would be a problem? As the atmospheric “gut feeling” theory has gone for the past few decades, it doesn’t matter because the same lot imagine that merely being European is cause for deserving power over others, especially after what their wonderful political movements and wars have done for civilization.

It must be nice to have a face-saving way to explain negligence, uncontrolled arms sales, and inaction in the face of things like ethnic cleansing in the Balkans, a mere 1000 km from Geneva.

Of course the author, a chap seemingly obsessed with the desconstruction of American capacity rather than anyone’s security, now has a title that doesn’t seem to fit on a garden variety business card, and a government job with rather hegemonious power over students:
Current Affiliation: Head, Secretariat of the Federal Commission for Scholarships for Foreign Students, State Secretariat for Education and Research (SER), Federal Department of Home Affairs, Bern, Switzerland
The author seems unconcerned with European security so much as he’s thirsty to see an all-powerful Europe, and for no clear reason. Suppositions about their humanism are theoretical and based solely on the sales literature. As with the 1954 KPD propagandist, he seems to abide by the old rule that seeks common cause can be found in hatred of an external entity over the use of security for the construction of peace and a balance of power, missing all of the lessons of the misery continental collectivist nationalism imposed upon the world.

Besides, nothing quite says rigorous scholarly skepticism than parroting the political propaganda of a tyrannical political racketeers written 30 years before you were born.

Thursday, March 18, 2010

Waaaay Too Much Information

Sometimes you just don’t want to know that much about some people’s sex lives.

The producers of “Game of Death” recruited 24 volunteers who were told that they were going to shoot a pilot for a new show called “La Zone Xtrême”, or “The Xtreme Zone”.
With no financial incentive on the table, the point of the game was to ask one “candidate” – played, in reality, by an actor – a series of questions. If he gave a wrong answer, the punishment would be an electric shock, with the voltage increasing by increments from 80 to 460 volts with each incorrect response.

‘Not my problem, eh?’

In the book about the documentary, “L’Expérience Extreme” (The Extreme Experiment), written by producer Christophe Nick and co-authored with journalist Michel Eltchaninoff, a participant identified as Patrick, a Metro driver, said he was happy to simply follow orders – because it was a TV show.
The instinct to obey, said Patrick, overrode all feelings for the man he believed was receiving the shocks and was in genuine pain.
While much is made of the fact that this mimics the dynamics of an American behavioral experiment that dew much nitice in the 1960’s, that isn’t what’s of interest in the story. Yale University psychologist Stanley Milgram’s experiment in how willing people were to screw each other over was not conceived of as light game show-cum-‘reality TV’ entertainment of the sort we have seen with “Fear Factor” and the like.

The ungrounded nature of whoever though this show a good idea is of more interest, not because of something surprising in the behavior of the participants, but of the clinical predictability, particularly in a society where many are fond of thinking themselves unique and rebellious, but are notoriously conformist and conditioned in their behavior. One hears at every turn about the miracle of –being them-, which is only made possible by the sameness of reactions from one person to the next.

Okay, so let’s bring back the three words all Europeans have been pedantically conditioned to repeat on the evidence of fewer abuse events than this TV show, and with no cause other than the playing out of the emotions of people making low-budget TV programming:
Abu-Ghreib! Guantanamo! Abu-Ghreib! Guantanamo! Abu-Ghreib! Guantanamo! Abu-Ghreib! Guantanamo! Abu-Ghreib! Guantanamo! Abu-Ghreib! Guantanamo!
A commentary in Britain’s Independent is inappropriately titled “However nice you are, you might push the button too” forgets that the reality of the choice should make that say “However morally bereft you are, you might push the button too”. Remember that there is something significant in common among the 20% who wouldn’t push the button. In Milgram’s data set of 40 years ago, it was 35% who refused to fry for the sake of conformity or a Paulingian happy pellet.

That’s nearly twice the number found in our enfeebled, present day postmodern world where even the intelligent and observant resort to the anesthetic use of saying “everyone would do it,” probably because they know what side of that 80-20 break they fall on.

Conjecture Continent

The head of Kazakhstan, a Pinkerton state, is pimping the idea that the pointless, make-work OSCE has created some purpose for itself in the world. I wonder if the Europeans staking their safety, security,and just about everything else on a myriad of external organizations realize that there is nothing internal for them to offer to accomplish it.

They can try to seem as important as they want, but in matters of global stability, it’s a case of alphabet soup outfits and European states wanting to look like they are partners wisely leading America, only to lecture it about wiping its feet before it enters the house it just saved from destruction. When it comes down to it, even in the Balkans, they can’t even attend to Europe’s security risks.

Kazakhstan calls on all OSCE states to show their readiness to act in favor of common interests and for the sake of collective goals and priorities, implementation of which will support and strengthen the OSCE and foster trust and respect for the Organization.
Okay. Thanks for the fine words to Nursultan Nazarbayev, President of Kazakhstan.

Now all the OSCE needs is a reason to exist, and then actually do something productive. Maybe a cold, overdesigned, blue glass building with aggressive looking details dome up in stainless steel, in a dull and tidy European city will make them feel like they matter. When all else fails they can resort to some mindless pap like everyone else, and do a ‘Mom and Apple Pie’ thing about ‘Climate Change’.
OSCE is an optimal platform to bring the Corfu process to the fore whilst opening a forum for strategically important initiatives including the European Security Treaty.
As a trans-national organization that unites Europe, Asia and North America, OSCE is responsible to comprehend and offer support for cross-border security issues.
Even the public affairs buffoonery requires summit-Kabuki, theatrically over-important names, and assertive sounding initiatives to help states that wouldn’t lift a finger for another member state think that they are a critical and cherished partner and key to the construction of heaven on earth.
We strongly believe that stabilization in Afghanistan can be implemented through active involvement and closer cooperation of regional organizations.
Nazarbayev’s writers are really showing that they’ve learned the codex of communication – note how willing and active the tone of the text is to coordinate and lead someone else’s capacity. On the strength of that evasion, they should redraw the map of Europe to include Kazakhstan.

Membership in things like the OSCE make one seem important at no cost, and seem to create nothing other than a platform for unkept promises and a very false sense of security.

Wednesday, March 17, 2010

Lucy, Charlie Brown, and the Football

The EU is going after Google, supporting the case of 3 niche-market search engines to tie them up in red tape. This comes after the great debacle of Google virtually stepping in to virtually run the digital branches of the national archives of several states at their own cost.

While they dream that the whole thing is some kind of street battle between the cheery, innocent Smurfs and the straw man American Gargamel, European whining about the success of American companies forget the number of virtual monopolies they have in the world. It’s a simple case of wanting it both ways, and wanting affection, pity, market share, and a fat tunnel report. They want YOUR cake and to eat it too.

Their competitive disadvantage was that they failed to produce products as successful as Intel, Google, Microsoft, and Apple.

Tuesday, March 16, 2010

So, what comes after satire?

Derision, scorn, reality, mockery, facts, nothing seems to work:

If there’s a drought – it’s global warming. When there’s a hurricane – it’s global warming. If there are heavy snows or even blizzards – it’s somehow global warming. And amazingly, the latest round of rainy and windy weather in the Northeast, well that’s consistent with this phenomenon as well, so says former Vice President Al Gore.

Gore, the self-anointed climate change alarmist-in-chief, told supporters on a March 15 conference call that severe weather in certain regions of the country could be attributed to carbon in the atmosphere – including the recent rash of rainy weather.

“[T]he odds have shifted toward much larger downpours,” Gore said. “And we have seen that happen in the Northeast, we’ve seen it happen in the Northwest – in both of those regions are among those that scientists have predicted for a long time would begin to experience much larger downpours.”
So much for the "weather isn't climate" routine.

Cheese Hating Surrender Monkeys

Traditional twit-hood and madcaperry have fallen victim to the cultural revolution of “Health and Safety”:

A centuries-old cheese rolling contest has fallen victim to health and safety — but not because of the broken bones and dozens of other injuries sustained each year.

Organisers of Gloucestershire’s annual competition have cancelled the event due to be held on May 31 because of concerns raised by the police and local authority over traffic and crowd control.
Cheesed off yet?
“Cheese rolling has been going on for hundreds of years and we must ensure that this great tradition continues.”

Crowd, protected.

Monday, March 15, 2010

The Ides of March are Upon Us!

That’s all I really wanted to say.

What France is Great At

A translation of a blog by Jean-Michel Aphatie on RTL where he comments on air:

A week of vacation can be a wonderful thing. A bit different than the news, but not too far either, because it let’s you tune into the Zeitgeist.

On Thursday the President made a speech on industry, whose prospects are gloomy. Since 2000, industrial production in France fell by 15%, and 535,000 manufacturing jobs have been eliminated. What to do? Simply put, because it is always better than doing complicated, the president has proposed that industrial production increased by 25% by 2015. If you want more than that just write it down. A pessimist would ask why only 25%? Or, why wait until 2015? But official minds say bravo.

This kind of political will is exactly the essence of French identity that we have sought to define for months. A problem? The President replied: track opportunities, and expands horizons. He analyzes and proposes. How very talented and courageous he looks when he’s being decisive. That's how it always goes in France.

Is it different elsewhere? Maybe. The low spirits that govern other countries are apparently more inhibited than we are by the reality, truth, the global context, the autonomy of economic actors, etc... Their public speeches are taken seriously. They are less likely to make promises than we are. As a result, they are often re-elected.
We haven had a re-election at the national level since 1978, which is a world record for a democracy. France is the country of the political mess. Elsewhere, Great Britain, Spain, Germany, United States, officials are often re-elected once. With us, not so.

But the big difference is that our leaders are beautiful. At the forum, so proud they men or women is the same. They understand, they know everything, and they make declarations, on everything, all the time. Some think that the first obligation of the policymaker is to be pedagogical in order to understand the real way forward. But we are not likely to think that. The more that political thought dominates the world, the more likely it is to submit to his wishes all the other stakeholders in society.

This is what yields the rhetoric, such beautiful emotions, such wonderful elections, a nation that commues around slogans of “changing life”, “reduce the social divide," and "work more to earn more." It’s after that where things go wrong. Bad luck sometimes, international crisis some other time. Each time, bad luck, external factors conspire to prevent France, led by great men, to spread its wings and fly. Without reality, we are the leading world power, thanks to our superior intellect that inspires us and guides us. What a pity.

Fortunately, we will leave. In five years, if there are many, 2015 - 2010, five, so yes, in five years, our industrial production will have increased by 25%. That means hundreds of thousands of jobs, a flood of tax revenue, and public deficits will be a memory, with the new social taxes filling the gap in Social Security entitlements.

And if this does not occur?
Inimaginable! Our president has declared it, and that’s the end of it.

Here’s a small gag that went unnoticed last night: Yesterday, the President of the French Republic has received the Greek Prime Minister, and not to let the Greeks down. If they have money problems, France will lend. The gag? The Greeks believed it, and left happy. Funny, no?
And of course the first few comments have nothing to do with Alphatie, and pedantically repeat the unrelated trope that Éric Zemmour is a racist, and the usual fixation with throwing Muslims out of the country.

Sunday, March 14, 2010

The Hitch-hiking Diplomat

First, you need to be a nation, and have something to say.

Lady Ashton's office said it is making enquiries into leasing a jet to ease the pressures of her demanding travel schedule, but hastened to dismiss rumours she wants to purchase an EU "Air Force One". Given the current economic climate in Europe, this would not go down well. Plus, as Euranet's Brussel correspondent Nina-Maria Potts points out, it could trigger a form of air envy, with every senior EU official demanding a bigger and better plane of their own.
Which raises an interesting point about the unwillingness of member states to assign upward any of their sovereignty, or, for that matter like the “great Darfouroise helicopter crisis”, even LEND the EU some of that finest in the world, world-beating, European hardware.

Call it Darfouroiserie, if you like. It’s the sound of wanting to do something, and saying so, even though you know there is no inclination for there to be an outcome, but like to hear talk of your own power.

Here’s a thought: give her a damn plane, and something real to do. Otherwise eliminate the position of “shadow foreign minister” who is shadowing no-one.