The supply lift vista in Meteora, Greece.
Image by centralasian via Flickr
In the latest Vanity Fair Michael Lewis, author of Liar’s Poker and The Big Short, did a fascinating piece on the Irish econopocalypse:
«A banking system is an act of faith: it survives only for as long as people believe it will. Two weeks earlier the collapse of Lehman Brothers had cast doubt on banks everywhere. Ireland’s banks had not been managed to withstand doubt; they had been managed to exploit blind faith. Now the Irish people finally caught a glimpse of the guy meant to be safeguarding them: the crazy uncle had been sprung from the family cellar. Here he was, on their televisions, insisting that the Irish banks were “resilient” and “more than adequately capitalized” … when everyone in Ireland could see, in the vacant skyscrapers and empty housing developments around them, evidence of bank loans that were not merely bad but insane. “What happened was that everyone in Ireland had the idea that somewhere in Ireland there was a little wise old man who was in charge of the money, and this was the first time they’d ever seen this little man,” says McCarthy. “And then they saw him and said, Who the fuck was that??? Is that the fucking guy who is in charge of the money??? That’s when everyone panicked.” »
The rest here [via Paul Kedrosky]
One of Forbes columnists recently killed an elk on a hunting trip. The experience moved him to examine the justness of his actions and to try to answer the ultimate question:
Is hunting immoral?
Full story here.
“Norway may become Europe’s next investor haven as the region’s fiscal turmoil raises the appeal of debt and currency markets in an economy with the world’s smallest default-risk.”
Details are located here.
The Columbia Business School-professor, makes the arguments in an updated edition of his book on the credit crunch, Freefall. In the new material, exclusively extracted in the Sunday Telegraph, he reveals his fears.
The European Central Bank in Frankfurt - via Flickr.
“The different needs of countries with high trade surpluses, particularly Germany, and those running deficits such as Ireland, Portugal and Greece, meant that the single currency was under intense pressure and may not survive. He suggests that one way to save the euro would be for Germany to leave the eurozone, so allowing the currency to devalue and help struggling countries with exports.
“Countries that share a currency have a fixed exchange rate with each other and thereby give up an important tool of adjustment,as long as there were no shocks, the euro would do fine. The test would come when one or more of the countries faced a downturn.”
Offshore oil plattform in the North Sea via Wikipedia
The world’s second largest sovereign wealth fund said it’s taking advantage of volatility to increase returns:
“If you look at what has happened during the financial crisis, a fund like ours actually came through it quite well and that to some extent increased our risk capacity and our risk willingness,” Yngve Slyngstad, head of Norges Bank Investment Management, said yesterday in a Bloomberg Television interview. “In a 30-year horizon you are actually paid for taking volatility; volatility for us is actually a good thing.”
Supplementary lessons from Norway’s Oil Fund on Bloomberg.
Interested in the Greek Tragedy? Marginal Revolution thinks this short essay worth spending a few minutes on:
“The lack of capital generation is the most serious implication of Greek geography. Situated as far from global flows of capital as any European country that considers itself part of the West, Greece finds itself surrounded by sheltered ports, most of which are protected by mountains and cliffs that drop off into the sea. This affords Greece little room for population growth, and contributes to its inability to produce much domestic capital. This, combined with the regionalized approach to political authority encouraged by mountainous geography, has made Greece a country that has been inefficiently distributing what little capital it has had for millennia.
Countries that have low capital growth and considerable infrastructural costs usually tend to develop a very uneven distribution of wealth. The reason is simple: Those who have access to capital get to build and control vital infrastructure and thereby make the decisions both in public and working life. In countries that have to import capital, this becomes even more pronounced, since those who control industries and businesses that bring in foreign cash have more control than those who control fixed infrastructure, which can always be nationalized (industries and businesses can move elsewhere if threatened with nationalization). When such uneven distribution of wealth is entrenched in a society, a serious labor-capital (or, in the European context, a left-right) split emerges. This is why Greece is politically similar to Latin American countries, which face the same infrastructural and capital problems, right down to periods of military rule and an ongoing and vicious labor-capital split.
Despite the limitations on its capital generation, Greece has no alternative but to create an expensive defensive capability that allows it to control the Aegean Sea. Put simply, the core of Greece is neither the breadbaskets of Thessaly and Greek Macedonia, nor the Athens-Piraeus metropolitan area, where around half of the population lives. The core of Greece is the Aegean Sea — the actual water, not the coastland — which allows these three critical areas of Greece to be connected for trade, defense and communication. Control of the Aegean also gives Greece the additional benefit of influencing trade between the Black Sea and the Mediterranean. Without control of the Aegean, there simply is no Greece.”
And here is a terrible song relating to the subject: