Weekend Economists Go Full Tin Hat November 22-24, 2013

[Demeter]

Ah, November! Deprived of the sweet smell of burning leaves by the Clean Air Act, we are instead treated to the hot electric smell of brains on overload.

It's Conspiracy Month, the month when the deepening gloom of winter, the slough of Economic Despair, and the sheer perversity of Man join together to make 30 days seem like 30 years of a bad marriage....and worse prose!

It is 50 years since our best and brightest was cut down by an assassin, and his brother shortly thereafter. I'm with the conspiracists on this one...something's rotten in the state of Texas, and until Poppy is gone and his heirs richly compensated, we probably won't know who ran the plan that took JFK out of action.

Harry Reid finally took the plunge and nuked the filibuster, for which he would have received the grateful thanks of a nation...4 years ago. Now, the best he can expect is a snarl. Conspiracy? Or just sheer laziness?

But perhaps the longest running conspiracy theory in this nation is the FEDERAL RESERVE BANKING SYSTEM. Here are some photos of the NY branch, which was blown up in Die Hard: With a Vengeance (1995), and perhaps other films, although that is the only one I've seen...(3 guesses which side I was rooting for...he may be a nice guy, but I'm not fond of Bruce Willis, and I was always a sucker for an accent).



The Main Entrance: The Bank employs over 3,000 people with careers in economics, law, markets, service, human resources and more. This picture shows employees entering and exiting the Bank through the main entrance at 33 Liberty Street.



The main building of the Federal Reserve Bank of New York was designed by the architects York and Sawyer. The stones are Indiana limestone and Ohio sandstone. The building's lowest floor is 50 feet below sea level.



The Bank: Architects York and Sawyer modeled the Bank after Florentine palaces in Italy. The size of the building and its façade molding suggest both the Pitti and Vecchio Palaces of Florence.



The Strozzi Palace in Florence, Italy, was one of the inspirations for the Bank's architects, York and Sawyer. Our stonework, arches and ironwork were modeled after the Strozzi Palace.



The original lanterns, created by metalworker Samuel Yellin, still adorn the outside of the main entrance to the Bank at 33 Liberty Street.



This is a clock mounted on the wall of the first floor of our main building. It is an original clock designed by metalworker Samuel Yellin, whose decorative work is prominent throughout the first floor.



Board Room Table: Made in 1935, this board room table is made of walnut with burl inlay. Reflected in the shine on the table is a chandelier designed to complement the Yellin metalwork, which graces the remainder of the executive floor of our building.


Of course, the building reflects the time (and the place): Art Deco, ripping off palaces, etc. It wouldn't do to house the Princes of the World in a converted K-Mart big box strip mall, would it?

And perhaps that's where it starts: the smell of money. That's what drives a conspiracy, isn't it? Cui Bono?

[Demeter]

1. I'm starting the Weekend Early--because we need a little weekend NOW!

and because I have the time and inspiration (now). I'm going to work on the theme of the thread here, and post current topical items on SMW until the close of markets in US, at which point I'll switch over to here. Got it?

Good!

[Tansy_Gold]

2. Cutters

It's amazing what a tiny bit of trivial information can start in terms of conspiratorial links in the mind of the imaginative.

This line, for instance, seems innocuous enough:

The main building of the Federal Reserve Bank of New York was designed by the architects York and Sawyer. The stones are Indiana limestone and Ohio sandstone.

Indiana limestone, however, provided part of the plot foundation (pun fully intended) for the delightful, jewel-perfect 1979 film Breaking Away.

http://www.rogerebert.com/reviews/breaking-away-1979

If you've never seen it, I highly recommend it. Roger Ebert's review barely does it justice. And it's a good antidote to November.

[canoeist52]

3. A sweet gem of a film. This was the first movie my honey and I saw in the theater together.

And Class Warfare abounds. Thanks for the memory.

[Tansy_Gold]

4. Oh, yeah. ;-) A big oh yeah.

The class distinctions are a big part of it, making the film just super suitable for our little community here.

[Demeter]

5. You mean, I have to get a copy and see it?

grumble, grumble....homework.....grumble...

[Tansy_Gold]

6. Yes. And you will NOT regret is

To sweeten the pot, Mendelssohn's Fourth Sympohny is featured throughout.

[hamerfan]

8. Another rec for Breaking Away!

Terrific film, but I haven't seen it in 20 years, at least. Guess I need to check ebay for a copy.
I was able to find a copy of Harold And Maude on ebay, so who knows?

[Tansy_Gold]

18. I think the DVD is only

something like $6 on Amazon. For some reason or other I have two VHS copies. So it shouldn't be difficult to find on eBay.

Just watching the trailer yesterday (more than once!) I really wanted to sit down and watch the whole thing again.

[Fuddnik]

7. Anybody looking for a gift for the pilot in the house....

I'm selling this.


http://www.ebay.com/itm/221319922002?ssPageName=STRK:MESELX:IT&_trksid=p3984.m1555.l2649

[DemReadingDU]

11. That's cool! several bidders too

Husband is a pilot only in FlightSim games, lol

[hamerfan]

9. Musical Interlude

Crime Of The Century by Supertramp:

[xchrom]

10. Switzerland Prepares To Vote On An Incredibly Radical Plan To Fight Inequality

http://www.businessinsider.com/switzerland-to-vote-on-112-initiative-2013-11



On Sunday afternoon we will find out if Switzerland will go ahead with one of the most radical plans to fight inequality ever: Limiting the monthly pay of top executives to that of their lowest paid employees' yearly salary.

Limiting compensation to 1:12 would be a historic change: Currently, a lot of Swiss firms have a ratio of more than 100:1. Roche, the Swiss drug giant, reportedly paid its top executive $13.9 million in 2012, and its lowest $59,000 — a ratio of 1:236.

This isn't just a Swiss thing either. One study has shown that the average American CEO earns 200 times the salary of their lowest paid employee.

The idea was proposed through Switzerland's direct democracy system, and if more than 50% of voters and representatives of the Swiss federal states (cantons) agree to it, it must become law. Voters have had a month to vote via post, and on Sunday they can attend polling stations.



Read more: http://www.businessinsider.com/switzerland-to-vote-on-112-initiative-2013-11#ixzz2lT9BosAt

[xchrom]

12. China establishes 'air-defence zone' over East China Sea

http://www.bbc.co.uk/news/world-asia-25062525

China has demarcated an "air-defence identification zone" over an area of the East China Sea, covering islands that are also claimed by Japan.

China's Defence Ministry said aircraft entering the zone must obey its rules or face "emergency defensive measures".

The islands, known as Senkaku in Japan and Diaoyu in China, are a source of rising tension between the countries.

Japan lodged a strong protest over what it said was an "escalation".

[xchrom]

13. the dow powers to new high

http://www.bbc.co.uk/news/business-11900474

(Close): The Dow Jones index of leading blue chip stocks closed at a new all-time high on Friday, after closing above the 16,000 mark for the first time on Thursday.

At close of trade the Dow - which recovered from early falls, was up by 54.78 points, or 0.34%, at 16064.77.

And the broader S&P 500 closed above 1,800 for the first time, up by 8.91 points, or 0.50%, at 1,804.76.

Meanwhile, the tech-based Nasdaq rose 22.49, or 0.57%, to 3,991.65.

[xchrom]

14. Online gambling in New Jersey signals US expansion

http://www.bbc.co.uk/news/technology-25051312

Online gambling has been launched in the state of New Jersey, a sign that the US may slowly be opening up to the multibillion-dollar industry.

Unlike in many countries, online gambling remains prohibited by the US government because of legislation passed in 1961.

Individual states may allow online gambling if it does not cross borders.

A test is under way in New Jersey to make sure only people within the state can play.

[xchrom]

15. 'Fat Cat' Backlash: Swiss Executive Pay Debate Gets Ugly

http://www.spiegel.de/international/europe/swiss-debate-about-1-12-executive-pay-cap-initiative-heats-up-a-935114.html

In Switzerland's current, polarized debate about executive salaries, Bern businesswoman Pia Tschannen could be considered a defector -- a woman in cahoots with the Young Socialists, the Social Democrats and the trade unions -- because she is campaigning for the 1:12 initiative, which is being put to referendum on Sunday.

The initiative's aim is to ensure managers cannot earn more in a month than a normal employee earns in a year. It would mean that nobody would be able to earn much more than 500,000 Swiss francs (€400,000) annually. "Ever higher salaries for managers imply that a company's success depends solely on one person. I don't believe that," says Tschannen.

In comparison, board members at Commerzbank, Germany's second biggest bank, were outraged at the government's insistence their pay be limited to €500,000 when the bank was bailed out with government money. Given Switzerland's historical association with Calvinism -- which is supportive of economic success -- the campaign has gathered surprisingly widespread support beyond the traditional left-wing. For a while, polls suggested advocates of the initiative were in a dead heat with their rivals, though support has now dropped.

War on the 'Fat Cats'

The referendum campaign focuses on what the young Socialists call "the fat cats" -- extremely well-payed managers in the business world. These include Daniel Vasella, former head of pharmaceuticals giant Novartis, who was scheduled to receive an exit payment of 72 million Swiss franc (€58 million) in spring 2013. Despite having waived the money following the outcry, Vasella is still seen as an archetypal greedy manager and his notoriety has fed the popularity of the 1:12 campaign, which would have had no chance of succeeding just a few years ago.

[xchrom]

16. How Much Do Americans Blame Washington for Their Economic Woes?

http://www.theatlantic.com/events/archive/2013/11/how-much-do-americans-blame-washington-for-their-economic-woes/281758/

It’s an old story by now: Americans aren’t feeling too positive about the federal government. A new National Journal poll reports approval ratings that would be laughable if they weren’t so grim, like the fact that only nine percent of Americans feel okay with Congress’s job performance, while a paltry one percent thinks the economy is in excellent shape.

But the poll also revealed something else: Many Americans blame the government for their personal financial problems, including how often they get raises and how easily they can get a loan. When asked for their opinion on how “the federal budget situation” affects their personal financial lives, 62 percent of respondents characterized it as “negative” or “somewhat negative.” Among those who saw the budget situation as negative, the top two reasons cited were “higher taxes” and “fewer opportunities for jobs or pay increase.”

For a few of these questions, people's views of how government affects their personal lives aren't exactly accurate, but that almost makes the poll more interesting in terms of what it says about the economy. Here are a couple of examples:

POLL QUESTION: In your opinion, did President Obama’s economic policies run up a record federal deficit while failing to significantly improve the economy?

When asked this question, 52 percent of respondents said yes. Most economists would say this isn't as simple as a yes or no question, though. Whether or not the president “significantly improved” the economy is subjective, but during his time in office, the deficit has actually been cut in half. Here’s Glenn Kessler at the Washington Post in September:

On Feb. 23, 2009, President Obama made this statement at the opening of a “fiscal responsibility” summit:
”This administration has inherited a $1.3 trillion deficit—the largest in our nation’s history—and our investments to rescue our economy will add to that deficit in the short term. … And that’s why today I’m pledging to cut the deficit we inherited in half by the end of my first term in office.”

The benchmark would be $1.3 trillion, and half of that would be $650 billion.

For the 2013 fiscal year, CBO in May projected that the deficit would shrink to $642 billion, which is obviously a huge drop. That means Obama would meet his pledge four years and eight months after he took office.

[xchrom]

17. Holiday job market off to strongest start in 14 years

http://www.rawstory.com/rs/2013/11/22/holiday-job-market-off-to-strongest-start-in-14-years/

It’s the happiest shopping season – and, for America's unemployed – a holiday hiring season that's off to its strongest start in 14 years.

Despite earlier prognostications that temporary seasonal jobs would not be as plentiful as last year, the retail industry added 159,000 jobs in October. That's a 6.7 percent increase from a year ago and the highest number of new hires in the first month of the annual holiday hiring period since 1999, according to an analysis of Bureau Labor Statistics data by global outplacement firm Challenger, Gray & Christmas, Inc.

Even more encouraging: Nearly half of employers hiring seasonal workers plan to transition some of them into permanent staff, according to CareerBuilder’s annual survey of 2,100 employers. This is a 10 percent increase from 2012 levels – good news for America’s 11.3 million unemployed.

The holiday hiring period runs from October through December, although most job additions typically occur in November.

[xchrom]

19. How Banker Paradise Switzerland Became The Leader In Fighting Inequality

http://www.businessinsider.com/swiss-economic-inequality-reform-2013-11

There's something strange going on in Switzerland. This Sunday, Swiss voters will vote on the 1:12 Initiative, a plan to limit the monthly pay of Swiss companies' top executives to the yearly pay of their lowest paid employees, an annual ratio of one to twelve. The people behind that idea hope both to curb enormous executive salaries and to raise the standards of living for the poor.

Then there's another, even more radical idea — a plan to give everyone a minimum basic income of 2,500 francs ($2,800) a month. To get this money, all you would have to do is be an adult citizen — and you could get this money even if you had a job. A vote on this idea is likely to be held in early 2016.

These ideas might sound crazy, but they're real possibilities. In fact, Switzerland has been debating a lot of ideas like this over the past year — in March, the country approved a plan that would give shareholders an annual ballot on managers’ pay (the plan was called an "initiative against 'fat cats'&quot , and next year the country will vote on a plan to impose a minimum wage of 4,000 Swiss francs ($4,300) a month.

What's most strange about this radical egalitarianism is that Switzerland has long held a reputation as a kind of capitalist paradise, with secretive banks, low taxes, and lots of gold.



Read more: http://www.businessinsider.com/swiss-economic-inequality-reform-2013-11#ixzz2lZ2ze34C

[xchrom]

20. Swiss voting no to capping bosses' pay at 12 times poorest paid

http://www.bbc.co.uk/news/business-25076879


Early results suggest Swiss voters are saying "no" to a proposal to bring in a law that would limit executive pay to 12 times that of the lowest paid.

Our correspondent in the country says the big business cantons, Zurich and St Gallen, are showing clear majorities against.

There are many more votes still to count, but it is clear the initiative cannot pass now.

The Young Socialists, who proposed it, have admitted defeat.

[xchrom]

21. Iran to Reap $7 Billion in Sanctions Relief Under Accord

http://www.bloomberg.com/news/2013-11-24/iran-to-reap-7-billion-in-sanctions-relief-under-accord.html

Iran will get as much as $7 billion in relief from economic sanctions over six months under the first-step agreement reached today in Geneva, the Obama administration said.

In return for Iran limiting its nuclear program, the interim agreement provides for the release of $4.2 billion in frozen oil assets and will let Iran continue exporting oil at current levels, rather than forcing continued reductions by buyers, as would be required under current law, according to a White House statement.

The accord also will “suspend certain sanctions on gold and precious metals, Iran’s auto sector and Iran’s petrochemical exports, potentially providing Iran approximately $1.5 billion in revenue,” the administration said.

Sanctions have cost Iran $120 billion in lost revenue since the U.S. and European Union started imposing strict penalties on energy, ports, insurance, shipping, banking and other Iran-related transactions in 2010, according to U.S. Treasury estimates. While almost all U.S. trade with Iran has been banned for decades, other than food and medical supplies, U.S. restrictions now apply to other countries that trade with the Islamic Republic.

[xchrom]

22. Jefferson County’s Bankruptcy Left Few Winners

http://www.bloomberg.com/news/2013-11-22/jefferson-county-s-bankruptcy-left-few-winners-as-debt-forgiven.html

The impact of Jefferson County’s bankruptcy will reverberate for decades in Alabama and in the $3.7 trillion U.S. municipal bond market.

Creditors, including JPMorgan Chase & Co. (JPM), agreed to forgive $1.4 billion of the county’s $3 billion sewer bonds. Ratepayers, like Charles Hicks, a retired landscaper who lives on a fixed income in Birmingham, will see his sewer rate rise about 8 percent annually for the next four years and 3.5 percent annually thereafter, under a plan approved by a federal judge on Nov 21.

“There’s a lot of pain going around -- bondholders are taking large losses, but ratepayers are as well,” said Matt Fabian, a managing director at Concord, Massachusetts-based Municipal Market Advisors.

For the next 40 years, residents and businesses that already have some of the highest sewer rates in the country will pay back more in principal and interest than they owed before the bankruptcy, according to an analysis by Jim White, a Birmingham-based financial adviser who did an analysis for residents challenging the bankruptcy plan. Until Detroit’s July filing, Jefferson County was the nation’s largest municipal bankruptcy.

[xchrom]

23. Treasury 10-Year Yields Climb as Investors Bet Fed Set to Taper

http://www.bloomberg.com/news/2013-11-23/treasury-10-year-yields-climb-as-investors-bet-fed-set-to-taper.html

Treasuries dropped, pushing 10-year note yields up for the third week this month, on speculation minutes of the Federal Reserve’s policy meeting indicated the bank may trim debt purchases by the end of the year.

The yield difference between five- and 10-year notes, known as the yield curve, widened to the most in two years Nov. 21 after a Labor Department report showed jobless claims fell more than forecast last week. Fed Bank of St. Louis President James Bullard said Nov. 20 a cutback in the bond-purchase program is “on the table” for policy makers’ December meeting. Treasury will sell $96 billion in notes next week.

“The market has accepted that tapering is going to be a reality,” said Ward McCarthy, chief financial economist in New York at Jefferies LLC, one of 21 primary dealers that trade with the Fed. “The Fed keeps telling us it’s a data-dependent decision and December is on the table. One of the consequences will be a steeper curve.”

The benchmark 10-year yield rose four basis points this week, or 0.04 percentage point, to 2.74 percent in New York, according to Bloomberg Bond Trader prices. The price of the 2.75 percent note maturing in November 2023 was 100 2/32.

[xchrom]

24. Spain Should Keep Bank Cash Dividend Limit in 2014, IMF Says

http://www.bloomberg.com/news/2013-11-22/spain-should-keep-bank-cash-dividend-limit-in-2014-imf-says.html

Spanish banks should limit cash dividends for another year and take advantage of a jump in share prices to raise capital, the International Monetary Fund said.

The government should consider strengthening the power of the Bank of Spain, which has recommended banks restrict cash dividends this year, so it can force them to cap payouts, the IMF said today in its fourth review of Spain’s progress in meeting the terms of its European banking bailout.

It should also consider attaching conditions to its plan to offer banks guarantees that will allow them to keep counting some deferred tax assets as capital. Legislation could force them to issue more equity or stop paying cash dividends for as long as three years in return for the help, the Washington-based IMF said.

Mounting losses at former savings banks including Bankia (BKIA) group led Spain to seek 41.3 billion euros ($55.8 billion) in European aid last year as the cost of cleaning up soured real estate assets risked undermining government finances. While Spain “remains on track” in meeting its bailout terms, bank profits could remain under pressure as households and companies scale back borrowing and the government continues to cut spending, the IMF said.

[xchrom]

25. Fed Not in the ‘Danger Zone’ as Exit Approaches, Lockhart Says

http://www.bloomberg.com/news/2013-11-22/fed-not-in-the-danger-zone-as-exit-approaches-lockhart-says.html

Federal Reserve Bank of Atlanta President Dennis Lockhart said he thinks the central bank can handle its exit from quantitative easing when the time comes, despite uncertainty caused by a balance sheet close to $4 trillion.

“At the moment, I don’t think we are in the danger zone,” said Lockhart, who is not a voting member of the policy-making Federal Open Market Committee this year. “The exit will be manageable when the time comes.”

Lockhart, who was speaking in an interview on CNBC television, said he’s not “overly worked up over this,” though the Fed has never before been in a position where it had to manage and normalize such a large balance sheet.

“There is a fair amount of uncertainty related to the longer-term consequences of growing the balance sheet,” according to Lockhart. “There could be some things that happen that are unanticipated.”

[antigop]

26. IF you like a star athlete, now you can buy a share

http://dealbook.nytimes.com/2013/10/17/want-a-piece-of-a-star-athlete-now-you-really-can-buy-one

From October 17:

First, there was old-fashioned gambling on football. Then came the fantasy leagues. And now, thanks to Wall Street, fans can buy a stake in their favorite player.

On Thursday, a start-up company announced a new trading exchange for investors to buy and sell interests in professional athletes. Backed by executives from Silicon Valley, Wall Street and the sports world, the company plans to create stocks tied to an athlete’s financial performance.

After considering a number of possibilities for its inaugural initial public offering, the company found a charismatic candidate in Arian Foster, the Pro Bowl running back of the Houston Texans. Investors in the deal will receive stock linked to Mr. Foster’s future earnings, which includes the value of his playing contracts, corporate endorsements and appearance fees.

The company, Fantex Holdings, has grand ambitions beyond a Foster I.P.O. — it hopes to sign up more football players and other athletes, as well as celebrities like pop singers and Hollywood actors.