There have been some rumbles about Italy for a while. Italy's budget deficits are relatively modest compared to, say, Ireland, but their debt is about 120% of GDP. The government has passed a plan that will balance the budget by 2014, but as with most such plans, most of the cutting comes later, while the current cuts are small. This may well be sensible fiscal policy, given the current economic climate, but it is not reassuring to the markets. Mike Shedlock estimates that Italy needs to borrow about €356 billion ($500 billion) in 2011 to cover its deficit, and roll over outstanding debt. Their 10-years are now trading at something north of 5%. Most of the estimates I've seen say that a debt death spiral becomes likely when rates hit somewhere between 6-7%, because the debt service costs start blowing up the budget deficits.
If Italy goes, it's not clear that the rest of Europe can save them. In the FT, Neil Dennis says people are talking about doubling the euro bailout fund to €1.5 trillion--or about three times the size of TARP. And you may have noticed that the bailout fund has not actually stopped Greece's descent into debt madness. Italy's public debt is not much smaller than Germany's, even though the latter obviously has a much bigger (and richer) economy. In the event that things really go south on the Italian peninsula, I don't think there's enough money in the rest of Europe to provide a rescue package.
Meanwhile, conditions in the other PIIGSs are worsening. European leaders seem to be giving up on the notion of some sort of voluntary debt swap after the ratings agencies noted that they would be forced to call this what it is: a default. Since the Greek debt load does not seem to be in any way sustainable, they're going to have to do something. Riots in Athens seem to be making it increasingly clear that over the long term, "something" is not going to be indefinitely decreasing their government consumption in order to make debt service payments. That leaves making bondholders take some sort of a haircut, aka default. It sounds as if the continent's financial leaders are starting to decide that if Greece's only option is some kind of default, they might as well bite the bullet and do the thing.
This will not be pretty. For starters, if they default, but stay in the euro, then unless really considerable aid is forthcoming from the rest of Europe, they're going to lose most of the advantages of the euro (low debt premium) while retaining the disadvantages (excessively tight monetary policy for a country that is going to be experiencing capital flight and even deeper recession). Countries like Argentina got at least some tourism and export boost from very cheap prices after they defaulted and went off their currency peg; Greece won't even get that if the euro remains at an ouchy 1.4 to the dollar. (If it doesn't remain there, but instead sinks . . . well, that means the euro zone will be having all sorts of other problems. More on which in a minute.)
Of course, even defaulting and going off the peg is hardly a gateway to paradise. It is true that after an initial period of horrifying double-digit contraction, Argentina boomed . . . but Argentina was an agricultural commodity exporter in an era when soaring Chinese demand was causing rapidly rising prices in many commodity markets. And after playing hardball with their foreign investors, Argentina has had limited access to global capital markets, which means they've had to resort to some desperate measures, like seizing the Argentinian equivalent of 401ks, and running the printing presses, to keep the government's finances in balance. This weekend, the Wall Street Journal informed me that Argentina has now resorted to filing criminal charges against economic consulting firms whose reports indicate that actual inflation exceeds the officially reported numbers by a factor of two to three.
Either way, what Greece does will have implications for the rest of Europe--and for us. As NPR's Jacob Goldstein says, interbank lending between various European nations, and the US, "looks like a web made by an insane spider".
Once Greece defaults, the immediate outcome is crisis, not calm. Within Greece, they'll need to find some way to close their primary deficit, and stem capital flight, while the economy craters. Outside of Greece, Portugal, Ireland, Spain and Italy will face growing pressure on their debt. The euro may plummet--good for German exports, not so good for attracting the kind of capital needed to keep the banking system solvent. And the rest of us will be scrambling to keep the contagion from taking down our banking systems, or our economies. No one wants another Credit-Anstalt. But I'm not sure anyone feels quite confident we can prevent it. As I tweeted yesterday, if the drama continues on both sides of the Atlantic, we may soon get to witness a paradox: where does a capital "flight to safety" go if America defaults while the euro implodes?
Why Nixon's former lawyer John Dean worries Trump could be one of the most corrupt presidents ever—and get away with it
Sometime early last fall, John Dean says he began having nightmares about a Trump presidency. He would wake in the middle of the night, agitated and alarmed, struggling to calm his nerves. “I’m not somebody who remembers the details of dreams,” he told me in a recent phone call from his home in Los Angeles. “I just know that they were so bad that I’d force myself awake and out of bed just to get away from them.”
Few people are more intimately acquainted than Dean with the consequences of an American presidency gone awry. As White House counsel under President Richard Nixon from 1970 to 1973, he was a key figure in the Watergate saga—participating in, and then helping to expose, the most iconic political scandal in modern U.S. history. In the decades since then, Dean has parlayed that resume line into something of a franchise, penning several books and countless columns on the theme of presidential abuses of power.
“Trump’s wall is already under construction,” Wole Soyinka says. “Walls are built in the mind.”
Wole Soyinka, the first African writer to be awarded the Nobel Prize in Literature, once fled to the United States from Nigeria. Now the fickle winds of politics are pushing him in the opposite direction.
Back in the 1960s, jailed for alleged associations with rebels amid the outbreak of the Nigerian Civil War, Soyinka composed protest poems on toilet paper in solitary confinement. “The man dies in all who keep silent in the face of tyranny,” Soyinka wrote in the collection of prison notes he later published. In the 1990s, the Nigerian strongman Sani Abacha confiscated Soyinka’s passport after the playwright urged Nigerians to stop paying taxes in defiance of military rule in the country. Soyinka managed to sneak out of his homeland and take refuge in the United States—a period he described to me as his “political sabbatical, because I never accepted, really, that I was in exile.”Abacha sentenced Soyinka to death in absentia. Soyinka’s crime was said to be treason.
The Michigan billionaire’s confirmation hearing was heavy on partisanship and light on substance.
Donald Trump advocated on the campaign trail for a $20 billion federal school-voucher program. But during her confirmation hearing on Tuesday evening, Betsy DeVos, the president-elect’s choice to lead the U.S. Education Department, said school choice should be a state decision. She framed school choice as a right for students and families. And she said during the hearing that she was committed to strengthening public education for all students.
While the Michigan billionaire has backed charter schools and vouchers, which let families use public money to pay for private schools, DeVos would not, she said, try to force states to embrace school choice. But a number of organizations, largely Democratic, that had raised questions about DeVos’s commitment to expanding charters and vouchers and about her family’s financial holdings and religious causes were unlikely to find much more of the hearing reassuring.
In its fourth season the BBC show turned its main character into a superhero, and lost everything that made it special in the process.
This story contains spoilers through the most recent episode of Sherlock.
Christopher Nolan is a truly brilliant British creative talent, which makes it all the more ironic that his work seems to have (at least temporarily) unmoored two of that nation’s greatest fictional heroes. In dampening the palette and tone of superhero movies so spectacularly with his trilogy of Batman movies, Nolan created a domino effect that stretched all the way across the ocean, transforming James Bond from a louche, debonair intelligence agent into a tortured, self-medicating hitman, compelled by the death of his parents to hunt down a series of increasingly psychopathic villains. And, as “The Final Problem” revealed on Sunday, Nolan’s influence has similarly transformed Sherlock. A wry detective drama with a twist has turned into a superhero origin story, complete with agonizing childhood trauma, terrifying antagonists with improbable powers, and a final showdown in an ancestral home burned to the ground.
Surfing the app on a trip back home can be a way of regressing, or imagining what life would be like if you never left.
My parents moved out of my hometown almost as soon as I left for college, and therefore I am obsessed with the idea of other people’s hometowns. Over any major holiday or break from a work schedule, hometowns become a sort of time travel, a way for people who have made adult lives elsewhere to return to their origin story.
Going home for the holidays can act as a kind of regression. Most of us know people, whether our friends, our partner, even our own parents, who suddenly turn into their teen or pre-teen self once they step foot in the house where they grew up. My mom used to say that whenever my dad got within 50 miles of his mom’s house, he suddenly became a teenage boy. Our hometowns become a kind of permission and hideaway, a place where we don’t have to be ourselves, where our actions don’t count and we get to be briefly less visible than we are in the adult homes we’ve made for ourselves elsewhere, the places where we expect ourselves to take action and achieve things and move upward through each day. For many of us, hometowns allow the luxury of a brief period of stasis, a rare few days of doing nothing.
A history of the first African American White House—and of what came next
In the waning days of President Barack Obama’s administration, he and his wife, Michelle, hosted a farewell party, the full import of which no one could then grasp. It was late October, Friday the 21st, and the president had spent many of the previous weeks, as he would spend the two subsequent weeks, campaigning for the Democratic presidential nominee, Hillary Clinton. Things were looking up. Polls in the crucial states of Virginia and Pennsylvania showed Clinton with solid advantages. The formidable GOP strongholds of Georgia and Texas were said to be under threat. The moment seemed to buoy Obama. He had been light on his feet in these last few weeks, cracking jokes at the expense of Republican opponents and laughing off hecklers. At a rally in Orlando on October 28, he greeted a student who would be introducing him by dancing toward her and then noting that the song playing over the loudspeakers—the Gap Band’s “Outstanding”—was older than she was.
Narcissism, disagreeableness, grandiosity—a psychologist investigates how Trump’s extraordinary personality might shape his possible presidency.
In 2006, Donald Trump made plans to purchase the Menie Estate, near Aberdeen, Scotland, aiming to convert the dunes and grassland into a luxury golf resort. He and the estate’s owner, Tom Griffin, sat down to discuss the transaction at the Cock & Bull restaurant. Griffin recalls that Trump was a hard-nosed negotiator, reluctant to give in on even the tiniest details. But, as Michael D’Antonio writes in his recent biography of Trump, Never Enough, Griffin’s most vivid recollection of the evening pertains to the theatrics. It was as if the golden-haired guest sitting across the table were an actor playing a part on the London stage.
“It was Donald Trump playing Donald Trump,” Griffin observed. There was something unreal about it.
How the FSB's loyalty to Russia's president made it the country's most powerful intelligence agency
It’s tempting to look to the playbooks and historical traditions of the late Soviet Union to explain the audacity of today’s Russian intelligence activity, from its meddling in U.S. elections, to apparently killing Kremlin opponents abroad. But these activities are not just products of old ways or new geopolitics. They also stem from a shift in the activities of Russia’s political police force, the infamous Federal Security Service (FSB). Originally established to protect the Kremlin’s rule at home, it has increasingly moved into Russia’s foreign operations.A new cohort of secret policemen, ignorant of the traditions of spycraft and secure in Putin’s protection, has fundamentally altered the nature of Russian intelligence.
The president-elect has yet to name a secretary of agriculture, a delay that has caused controversy and illustrated the difficulties governing will pose.
Three days before Donald Trump is to be inaugurated as America’s new president, just one Cabinet agency lacks a nominee to lead it: the Department of Agriculture.
The pick has become mired in politics and drama, unsettling the agriculture industry and potentially imperiling Trump’s standing with some of his most ardent supporters—the residents of rural America. In the process, it has become a case study in the difficulty Trump will face as he begins to govern, as his sweeping promises and catchy slogans run up against competing interests.
Already, the delay in picking an agriculture secretary has caused alarm. “The lack of quick and decisive action on picking a new Secretary of Agriculture by the Trump administration has given rise to charges that agriculture is not a high priority for the incoming president,” columnist Gary Truitt wrote recently in Hoosier Ag Today. “While this may or may not be true, the fact that this was the last cabinet post to be filled has raised concerns and will produce some challenges for the new nominee.”
A scathing obituary of Richard Nixon, originally published in Rolling Stone on June 16, 1994
MEMO FROM THE NATIONAL AFFAIRS DESK
DATE: MAY 1, 1994
FROM: DR. HUNTER S. THOMPSON
SUBJECT: THE DEATH OF RICHARD NIXON: NOTES ON THE PASSING OF AN AMERICAN MONSTER.... HE WAS A LIAR AND A QUITTER, AND HE SHOULD HAVE BEEN BURIED AT SEA.... BUT HE WAS, AFTER ALL, THE PRESIDENT.
"And he cried mightily with a strong voice, saying, Babylon the great is fallen, is fallen, and is become the habitation of devils, and the hold of every foul spirit and a cage of every unclean and hateful bird."
Richard Nixon is gone now, and I am poorer for it. He was the real thing -- a political monster straight out of Grendel and a very dangerous enemy. He could shake your hand and stab you in the back at the same time. He lied to his friends and betrayed the trust of his family. Not even Gerald Ford, the unhappy ex-president who pardoned Nixon and kept him out of prison, was immune to the evil fallout. Ford, who believes strongly in Heaven and Hell, has told more than one of his celebrity golf partners that "I know I will go to hell, because I pardoned Richard Nixon."