Here's a pro tip: You can't bail anyone out if you don't have any money.
This isn't exactly breaking news, but it is a problem for Spain. Their government is running out of money, and so are their banks. This is normally the time to go to Germany for a sovereign bailout. But Spain has understandably resisted. They're terrified of fully surrendering fiscal sovereignty like Greece, Ireland, and Portugal. An even deeper depression would beckon.
So, instead, we get a game of chicken.
Let's step back a minute. Spain has a trio of problems. First, it has a frightening unemployment problem that's created a deficit crisis, due to its housing bust. Second, its banks have a bad loan problem, again due to its housing bust. And third, it has a capital flight problem. Depositors are moving their money out of Spanish banks into German banks -- some €100 billion or so in the first quarter of 2012 alone -- due to fears that Spain might devalue and abandon the common currency.
The chart below from the Institute of Empirical Research at the University of Osnabrück (via FT Alphaville) basically shows how much each euro zone member owes or is owed by the ECB. It's a good proxy for how much capital flight there's been from each euro zone country. Spain (purple) is the worst, just edging out Italy.
Spain's banks are dead. Their assets and deposit bases are both evaporating. But the government can't afford to bail them out.
Here's how the game of chicken works. Germany wants Spain to formally accept a bailout package. It would be just on the edge of affordable for Germany right now, but it would give Germany control of Spain's budget. Not so surprisingly, this doesn't sound like a good deal to Spain. So instead, Spain has more or less asked the ECB to print some money and give it to their banks. There is precedent for this: It's basically what the ECB has done with some Greek and Irish banks -- although that was after those countries had already accepted bailout programs. The ECB doesn't want to do this as a substitute for an outright bailout, so it has said no. Hence, the standoff.
Spain has another problem. They don't have much leverage. They can threaten to blow up the euro, but it's not that credible a threat. Even if Spain defaulted on all of its debt, it would still have a budget deficit of 6 percent of GDP. It would have to cut spending or raise taxes by roughly that much -- or print the difference. In other words, a disaster. At best, Spain can hope to wrest a few concessions from Germany before accepting a bailout -- like giving it more time to cut its deficit.
Italy should be paying attention. Like Spain, their banks are in trouble. But unlike Spain, Italy has a primary surplus -- that is, its budget minus its interest payments is in the black. A euro zone exit would still be a disaster, but it would be a manageable disaster. As crazy as it sounds, ex-Prime Minister Silvio Berlusconi is right: Italy should consider chucking the common currency if the ECB doesn't start printing money.
Things couldn't get much more upside-down now in Europe.
On “Back to Back Freestyle” and “Charged Up,” the rapper forgoes the high road in his beef with Meek Mill.
Once upon a time, Drake made a vow of silence. “Diss me, you'll never hear a reply for it,” he said on “Successful,” the 2009 song in which the Toronto rapper correctly predicted he’d soon be superwealthy. This week, Drake has broken his vow twice over, a fact about which he seems conflicted. “When I look back,” he says on the new track “Back to Back Freestyle,” “I might be mad that I gave this attention.”
“This” is the beef started by the 28-year-old Philadelphia rapper Meek Mill, who recently tweeted accusations that Drake doesn’t write his own material. Depending on who you talk to or how you look at it, this is either a big deal or no deal at all. On Instagram, Lupe Fiasco had a good take: “Ghostwriting, or borrowing lines, or taking suggestions from the room has always been in rap and will always be in rap. It is nothing to go crazy over or be offended about unless you are someone who postures him or herself on the importance of authenticity and tries to portray that quality to your fans or the public at large. Then we might have a problem.”
Even when they’re adopted, the children of the wealthy grow up to be just as well-off as their parents.
Lately, it seems that every new study about social mobility further corrodes the story Americans tell themselves about meritocracy; each one provides more evidence that comfortable lives are reserved for the winners of what sociologists call the birth lottery. But, recently, there have been suggestions that the birth lottery’s outcomes can be manipulated even after the fluttering ping-pong balls of inequality have been drawn.
What appears to matter—a lot—is environment, and that’s something that can be controlled. For example, one study out of Harvard found that moving poor families into better neighborhoods greatly increased the chances that children would escape poverty when they grew up.
While it’s well documentedthat the children of the wealthy tend to grow up to be wealthy, researchers are still at work on how and why that happens. Perhaps they grow up to be rich because they genetically inherit certain skills and preferences, such as a tendency to tuck away money into savings. Or perhaps it’s mostly because wealthier parents invest more in their children’s education and help them get well-paid jobs. Is it more nature, or more nurture?
Jim Gilmore joins the race, and the Republican field jockeys for spots in the August 6 debate in Cleveland.
After decades as the butt of countless jokes, it’s Cleveland’s turn to laugh: Seldom have so many powerful people been so desperate to get to the Forest City. There’s one week until the Republican Party’s first primary debate of the cycle on August 6, and now there’s a mad dash to get into the top 10 and qualify for the main event.
With former Virginia Governor Jim Gilmore filing papers to run for president on July 29, there are now 17 “major” candidates vying for the GOP nomination, though that’s an awfully imprecise descriptor. It takes in candidates with lengthy experience and a good chance at the White House, like Scott Walker and Jeb Bush; at least one person who is polling well but is manifestly unserious, namely Donald Trump; and people with long experience but no chance at the White House, like Gilmore. Yet it also excludes other people with long experience but no chance at the White House, such as former IRS Commissioner Mark Everson.
The Vermont senator’s revolutionary zeal has met its moment.
There’s no way this man could be president, right? Just look at him: rumpled and scowling, bald pate topped by an entropic nimbus of white hair. Just listen to him: ranting, in his gravelly Brooklyn accent, about socialism. Socialism!
And yet here we are: In the biggest surprise of the race for the Democratic presidential nomination, this thoroughly implausible man, Bernie Sanders, is a sensation.
He is drawing enormous crowds—11,000 in Phoenix, 8,000 in Dallas, 2,500 in Council Bluffs, Iowa—the largest turnout of any candidate from any party in the first-to-vote primary state. He has raised $15 million in mostly small donations, to Hillary Clinton’s $45 million—and unlike her, he did it without holding a single fundraiser. Shocking the political establishment, it is Sanders—not Martin O’Malley, the fresh-faced former two-term governor of Maryland; not Joe Biden, the sitting vice president—to whom discontented Democratic voters looking for an alternative to Clinton have turned.
Today's cities may be more diverse overall, but people of different races still don’t live near each other.
Nearly 50 years ago, after a string of race-related riots in cities across America, President Lyndon B. Johnson commissioned a panel of civic leaders to investigate the underlying causes of racial tension in the country.
The result was the Kerner Report, a document that castigated white society for fleeing to suburbs, where they excluded blacks from employment, housing, and educational opportunities. The report’s famous conclusion: “Our nation is moving toward two societies, one black, one white—separate and unequal.”
Much of America would like to believe the nation has changed since then. The election of a black President was said to usher in a “post-racial era.” Cheerios commercials nowfeature interracial couples. As both suburbs and cities grew more diverse, more than one academic study trumpeted theend of segregation in American neighborhoods.
Three decades after the FBI launched a revolutionary system to catch repeat offenders, it remains largely unused.
QUANTICO, Virginia—More than 30 years ago, the Federal Bureau of Investigation launched a revolutionary computer system in a bomb shelter two floors beneath the cafeteria of its national academy. Dubbed the Violent Criminal Apprehension Program, or ViCAP, it was a database designed to help catch the nation’s most violent offenders by linking together unsolved crimes. A serial rapist wielding a favorite knife in one attack might be identified when he used the same knife elsewhere. The system was rooted in the belief that some criminals’ methods were unique enough to serve as a kind of behavioral DNA—allowing identification based on how a person acted, rather than their genetic make-up.
Equally as important was the idea that local law-enforcement agencies needed a way to better communicate with each other. Savvy killers had attacked in different jurisdictions to exploit gaping holes in police cooperation. ViCAP’s “implementation could mean the prevention of countless murders and the prompt apprehension of violent criminals,” the late Senator Arlen Specter wrote in a letter to the Justice Department endorsing the program’s creation.
During the multi-country press tour for Mission Impossible: Rogue Nation, not even Jon Stewart has dared ask Tom Cruise about Scientology.
During the media blitz for Mission Impossible: Rogue Nation over the past two weeks, Tom Cruise has seemingly been everywhere. In London, he participated in a live interview at the British Film Institute with the presenter Alex Zane, the movie’s director, Christopher McQuarrie, and a handful of his fellow cast members. In New York, he faced off with Jimmy Fallon in a lip-sync battle on The Tonight Show and attended the Monday night premiere in Times Square. And, on Tuesday afternoon, the actor recorded an appearance on The Daily Show With Jon Stewart, where he discussed his exercise regimen, the importance of a healthy diet, and how he still has all his own hair at 53.
Stewart, who during his career has won two Peabody Awards for public service and the Orwell Award for “distinguished contribution to honesty and clarity in public language,” represented the most challenging interviewer Cruise has faced on the tour, during a challenging year for the actor. In April, HBO broadcast Alex Gibney’s documentary Going Clear, a film based on the book of the same title by Lawrence Wright exploring the Church of Scientology, of which Cruise is a high-profile member. The movie alleges, among other things, that the actor personally profited from slave labor (church members who were paid 40 cents an hour to outfit the star’s airplane hangar and motorcycle), and that his former girlfriend, the actress Nazanin Boniadi, was punished by the Church by being forced to do menial work after telling a friend about her relationship troubles with Cruise. For Cruise “not to address the allegations of abuse,” Gibney said in January, “seems to me palpably irresponsible.” But in The Daily Show interview, as with all of Cruise’s other appearances, Scientology wasn’t mentioned.
The Islamic State is no mere collection of psychopaths. It is a religious group with carefully considered beliefs, among them that it is a key agent of the coming apocalypse. Here’s what that means for its strategy—and for how to stop it.
What is the Islamic State?
Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.
His press conference announcing murder charges had just one flaw: He understated how often police officers shoot unarmed people in traffic stops.
On Wednesday, as officials in Hamilton County, Ohio, released video footage of University of Cincinnati Police Officer Ray Tensing shooting unarmed motorist Samuel DuBose in the head during a traffic stop, prosecutor Joe Deters conducted himself as professionally and appropriately as any prosecutor I’ve ever seen in a similar situation.
The 30-year veteran, who announced that officer Tensing was being indicted for murder, took immediate care to affirmatively state that the victim in the case was not responsible for his fate. “This is the most asinine act I’ve ever seen a police officer make,” he told reporters. “People want to believe that Mr. DuBose had done something violent toward the officer; he did not. He did not at all. And I feel so sorry for his family and what they lost. And I feel sorry for the community, too.”
Every time you shrug, you don’t need to Google, then copy, then paste.
Updated, 2:20 p.m.
All hail ¯\_(ツ)_/¯.
In its 11 strokes, the symbol encapsulates what it’s like to be an individual on the Internet. With raised arms and a half-turned smile, it exudes the melancholia, the malaise, the acceptance, and (finally) the embrace of knowing that something’s wrong on the Internet and you can’t do anything about it.
As Kyle Chayka writes in a new history of the symbol at The Awl, the meaning of the “the shruggie” is always two, if not three- or four-, fold. ¯\_(ツ)_/¯ represents nihilism, “bemused resignation,” and “a Zen-like tool to accept the chaos of universe.” It is Sisyphus in unicode. I use it at least 10 times a day.
For a long time, however, I used it with some difficulty. Unlike better-known emoticons like :) or ;), ¯\_(ツ)_/¯ borrows characters from the Japanese syllabary called katakana. That makes it a kaomoji, a Japanese emoticon; it also makes it, on Western alphabetical keyboards at least, very hard to type. But then I found a solution, and it saves me having to google “smiley sideways shrug” every time I want to quickly rail at the world’s inherent lack of meaning.