What Europe's coming debt default will look like

I’m not sure why everyone thought comments the other day from the German Finance minister, Wolfgang Schäuble, to the effect that Greece may eventually face a sovereign debt restructuring, were such a revelation. This is in fact only a statement of the blindingly obvious, has been apparent in the market price of Greek sovereign debt for more than a year now, and was in any case implicit in the statement issued after the European Council meeting of March 24-25, when ministers said restructuring would be a pre-condition to borrowing from the European Stability Mechanism if debt was judged to be on an unsustainable path.

Even so, combined with the latest Moody’s downgrade on Friday of Irish sovereign debt, his comments have sparked a fresh round of jitters in markets, and led some commentators to think an act of default among the peripheral eurozone economies is imminent. I don’t doubt that certainly Greece, and possibly Ireland and Portugal will eventually have to restructure, but here’s why it’s not going to happen any time soon.

Read the rest here.

I think the author is underestimating the speed with which bond prices can collapse irretrievably once the markets lose confidence in them.

EU debt costs rise after Ireland downgrade, Greek delays

Borrowing cost for the eurozone's most indebted economies rose on Friday after Moody's cut Ireland's rating to just above "junk" and Greece delayed fleshing out fresh austerity and privatisation plans.

Greek, Irish, Spanish, and Portuguese 10-year government bond yields rose as markets continued to believe further debt restructurings will be needed eventually.

Fears that Greece will default rose to fresh highs yesterday after Wolfgang Schaeuble, the German Finance ministers, that a further restructuring of the company's debt may be needed, despite last year's €110bn (£97bn) bail-out.

George Papandreou, the Greek Prime Minister, did little to appease market jitters when he presented the outline of fresh fiscal plans but said the measures would only be spelled out in detail after Easter.

Read the rest here.

China sees inflation jump as blistering growth continues

China's turbo-charged growth eased slightly in the first quarter, while inflation jumped to a 32-month high, putting pressure on the government to do more to rein in prices and keep the economy on an even keel.

China's gross domestic product (GDP) increased by 9.7pc in the first quarter from a year earlier, down from 9.8pc in the final three months of 2010 but ahead of an expected growth rate of 9.5pc.

However consumer price inflation sped to 5.4pc in the year to March, the fastest since July 2008 and ahead of market forecasts for a 5.2pc increase.

Agricultural prices have been the main driver of Chinese inflation and that remained the case, with food costs up 11.7pc in the year to March. But there were also signs of a broadening of pressures, with non-food inflation up 2.7pc year on year, the fastest in more than a decade.

Taken together, the data published by the National Bureau of Statistics on Friday showed that the world's second-largest economy was still sizzling, little hindered by the central bank's half-year tightening campaign that many investors had feared would undermine growth.

"The figures show that [China's] inflation pressure will not taper off in the short term and we expect the consumer inflation to remain high in the second quarter," said Sun Miaoling, an economist with CICC, the largest Chinese investment bank.

Read the rest here.

No-tax-hike pledge creates Republican rift

Republicans are feuding over whether to abandon the party’s long-held opposition to higher taxes in pursuit of a deficit-cutting deal with Democrats.

The rift in the Republican ranks has surfaced in a bitter back-and-forth between two heroes of the conservative movement: Sen. Tom Coburn of Oklahoma, who has been working with a bipartisan group of senators on a compromise to reduce government borrowing, and Grover Norquist, author of the no-tax-increase pledge that has become a rite of passage for GOP candidates.

At stake is a pillar of Republican orthodoxy that has for decades united every wing of the party in a quest to shrink government’s reach.

As the battle over the federal deficit escalates in Washington, the two men are sparring over Coburn’s seemingly narrow proposal to eliminate a $5 billion annual tax break awarded to companies that blend ethanol into gasoline. But both sides say this cuts to the core of a quandary for the GOP: Will the cause of trimming deficits run aground on the conservative principle that the government must not increase the amount of money it takes in through taxes?

Coburn has been the most visible Republican to challenge Norquist, perhaps the country’s most influential anti-tax advocate, but other Republicans have been willing to discuss a budget deal that would include raising more money through taxes, along with making deep spending cuts, to help reduce the deficit.

These include stalwart conservatives such as Sens. Saxby Cham­bliss (R-Ga.) and Mike Crapo (R-Idaho). And on the ethanol issue, Coburn has drawn support from such conservative-movement fixtures as the Heritage Foundation and the Wall Street Journal editorial board.

And even some House leaders, including Budget Chairman Paul Ryan (R-Wis.) and Ways and Means Chairman Dave Camp (R-Mich.), have left the door open to negotiation.

For anti-tax purists, including many in the Republican Party, eliminating the ethanol break is unacceptable — measures that roll back corporate subsidies, individual deductions or loopholes of any sort without comparable tax cuts elsewhere are considered tax increases.

Read the rest here.

Muslims want, and Orthodox Church opposes, Crescent added to Russian Eagle

"The Russian state emblem has a history of many centuries and it has stood the test of time. It has not been supplanted by Soviet symbols, which are falling into oblivion at an enormous speed, while the symbols, historically justified, are again finding their due place in Russia's life," Archpriest Vsevolod Chaplin, the head of the Synodal Department for Church and Society Relations, told Interfax-Religion on Friday.

"It would be unfair to revise this symbol from the point of view of Russia's historical heritage, the more so since the Muslim symbols - the Crescent, for instance - could be very well used in the regional emblems in the predominantly Muslim regions - there are such regions in this country," he said.

Father Vsevolod was commenting on head of Russia's Muslim Board Talgat Tajuddin's interview. "We are only asking to crown one head of the double-headed eagle on the state emblem with the Crescent and the other with the Orthodox Cross. And let the Cross and the Crescent be capped by the crown in the middle," Tajuddin said.

The Mufti backed polygamy, saying, "Some are putting this Koran principle into life already, marrying two, three, or four women." "Four lawfully-wedded wives are better than 40 mistresses. Russian men have 40 mistresses, each," he said.

Father Vsevolod said in this connection that he profoundly respects Mufti Tajuddin and the Russian Muslim community.

"However, Orthodox Christians have always cherished the union between one man and one woman as their marriage ideal. This is the choice the religious majority has made in our society. This choice must always be kept in mind, for all respect for traditional exceptions," he said.

Source

On this date...

On April 15th 1846 the Donner party departed for California.

On April 15 1861 Abraham Lincoln responded to the Confederate attack on the American flag and military garrison at Fort Sumter by calling for 75,000 militia to suppress an armed insurrection against the United States.  Until the rebels attacked, much of the North was ambivalent and divided about how to respond to Southern secession.  That changed overnight. All across the country telegraph offices and newspapers were mobbed by people waiting for the latest bulletins.  The attack on Sumter instantly galvanized the North and at a stroke the South lost whatever sympathy and support she had hitherto had.  In its place a cold fury took hold of the entire country the likes of which had never been seen, and would not be seen again until December 7th 1941.

Military recruiting offices were mobbed even before Lincoln issued his call to arms.  Politicians of every party damned the South and called for an end to forbearance and the immediate suppression of the rebellion.  State governors of both parties burned up the telegraph lines to Washington begging for a call to arms and instructions on where to send troops.  Some states reported that they could supply all 75,000 men on their own.  New York City, which in the previous winter had contemplated seceding itself, cabled that it could offer 50,000 of the requested troops.

Rage and war fever swept the North.

On April 15th 1865 Abraham Lincoln died from a gunshot wound inflicted the night before.

On April 15th 1912 the brand new British trans-Atlantic passenger ship Titanic sank just under three hours after striking an iceberg with a horrific loss of life.

On April 15th 1927 the Great Mississippi Flood of 1927, the most destructive river flood in U.S. history, began.

And of course... it's income tax day.

Some uncomfortable observations on taxes

Via the Orthodox Caveman

For three decades we have conducted a massive economic experiment, testing a theory known as supply-side economics. The theory goes like this: Lower tax rates will encourage more investment, which in turn will mean more jobs and greater prosperity—so much so that tax revenues will go up, despite lower rates. The late Milton Friedman, the libertarian economist who wanted to shut down public parks because he considered them socialism, promoted this strategy. Ronald Reagan embraced Friedman’s ideas and made them into policy when he was elected president in 1980.

For the past decade, we have doubled down on this theory of supply-side economics with the tax cuts sponsored by President George W. Bush in 2001 and 2003, which President Obama has agreed to continue for two years.

You would think that whether this grand experiment worked would be settled after three decades. You would think the practitioners of the dismal science of economics would look at their demand curves and the data on incomes and taxes and pronounce a verdict, the way Galileo and Copernicus did when they showed that geocentrism was a fantasy because Earth revolves around the sun (known as heliocentrism). But economics is not like that. It is not like physics with its laws and arithmetic with its absolute values.

Tax policy is something the framers left to politics. And in politics, the facts often matter less than who has the biggest bullhorn.

The Mad Men who once ran campaigns featuring doctors extolling the health benefits of smoking are now busy marketing the dogma that tax cuts mean broad prosperity, no matter what the facts show.

As millions of Americans prepare to file their annual taxes, they do so in an environment of media-perpetuated tax myths. Here are a few points about taxes and the economy that you may not know, to consider as you prepare to file your taxes. (All figures are inflation-adjusted.)

Read the rest here.

Do Cellphones Cause Brain Cancer?

On Jan. 21, 1993, the television talk-show host Larry King featured an unexpected guest on his program. It was the evening after Inauguration Day in Washington, and the television audience tuned in expecting political commentary. But King turned, instead, to a young man from Florida, David Reynard, who had filed a tort claim against the cellphone manufacturer NEC and the carrier GTE Mobilnet, claiming that radiation from their phones caused or accelerated the growth of a brain tumor in his wife.

“The tumor was exactly in the pattern of the antenna,” Reynard told King. In 1989, Susan Elen Reynard, then 31, was told she had a malignant astrocytoma, a brain cancer that occurs in about 6,000 adults in America each year. To David Reynard, the shape and size of Susan’s tumor — a hazy line swerving from the left side of her midbrain to the hindbrain — uncannily resembled a malignant shadow of the phone (but tumors, like clouds, can assume the shapes of our imaginations). Suzy, as she was known, held her phone at precisely that angle against her left ear, her husband said. Reynard underwent surgery for her cancer but to little effect. She died in 1992, just short of her 34th birthday. David was convinced that high doses of radiation from the cellphone was the cause.

Read the rest here.  (long article.)

My sister is among those convinced that cell phones (she calls then "tumor phones") are a carcinogen. But then again she refuses to allow anything more modern than a rotary phone in her house.

In Financial Crisis, No Prosecutions of Top Figures

It is a question asked repeatedly across America: why, in the aftermath of a financial mess that generated hundreds of billions in losses, have no high-profile participants in the disaster been prosecuted?

Answering such a question — the equivalent of determining why a dog did not bark — is anything but simple. But a private meeting in mid-October 2008 between Timothy F. Geithner, then-president of the Federal Reserve Bank of New York, and Andrew M. Cuomo, New York’s attorney general at the time, illustrates the complexities of pursuing legal cases in a time of panic.

At the Fed, which oversees the nation’s largest banks, Mr. Geithner worked with the Treasury Department on a large bailout fund for the banks and led efforts to shore up the American International Group, the giant insurer. His focus: stabilizing world financial markets.

Mr. Cuomo, as a Wall Street enforcer, had been questioning banks and rating agencies aggressively for more than a year about their roles in the growing debacle, and also looking into bonuses at A.I.G.

Friendly since their days in the Clinton administration, the two met in Mr. Cuomo’s office in Lower Manhattan, steps from Wall Street and the New York Fed. According to three people briefed at the time about the meeting, Mr. Geithner expressed concern about the fragility of the financial system.

His worry, according to these people, sprang from a desire to calm markets, a goal that could be complicated by a hard-charging attorney general.

Asked whether the unusual meeting had altered his approach, a spokesman for Mr. Cuomo, now New York’s governor, said Wednesday evening that “Mr. Geithner never suggested that there be any lack of diligence or any slowdown.” Mr. Geithner, now the Treasury secretary, said through a spokesman that he had been focused on A.I.G. “to protect taxpayers.”

Whether prosecutors and regulators have been aggressive enough in pursuing wrongdoing is likely to long be a subject of debate. All say they have done the best they could under difficult circumstances.

But several years after the financial crisis, which was caused in large part by reckless lending and excessive risk taking by major financial institutions, no senior executives have been charged or imprisoned, and a collective government effort has not emerged. This stands in stark contrast to the failure of many savings and loan institutions in the late 1980s. In the wake of that debacle, special government task forces referred 1,100 cases to prosecutors, resulting in more than 800 bank officials going to jail. Among the best-known: Charles H. Keating Jr., of Lincoln Savings and Loan in Arizona, and David Paul, of Centrust Bank in Florida.

Former prosecutors, lawyers, bankers and mortgage employees say that investigators and regulators ignored past lessons about how to crack financial fraud.

Read the rest here.

Duke (false) rape accuser faces possible murder charge

DURHAM, N.C. — A man who police say was stabbed by a woman who falsely accused Duke lacrosse players of rape has died, and the woman could face murder charges in the death.

Durham Police Chief Jose Lopez Jr. told The Herald-Sun of Durham Wednesday that 46-year-old Reginald Daye was dead.

According to WRAL-TV and the newspaper, Daye had been taken to Duke University Hospital after being stabbed with a kitchen knife on April 3.
Story: Duke lacrosse accuser convicted of child abuse

Crystal Mangum was charged with assault with a deadly weapon with intent to kill inflicting serious injury and has been jailed since the stabbing.

"More than likely, we will be upgrading the charge to murder," Lopez told the Herald-Sun.

It was not immediately clear where or how Daye died.
Story: Duke lacrosse players relieved case has ‘closure’

Durham police didn't immediately return messages from The Associated Press.

Jail officials said they didn't know if the 32-year-old Mangum had an attorney.

Source.

Prayers for the approach of death

1. When, exhausted by illness, I sense that the end of my earthly existence is approaching: Lord, have mercy upon me.


2. When my poor heart, beating its last, is languishing and pining in the pangs of death: Lord, have mercy upon me.


3. When for the last time, my eyes fill with tears at the thought that with sins throughout my life I have offended Thee, O God: Lord, have mercy upon me.


4. When my rapid heartbeat speeds the departure of my soul: Lord, have mercy upon me.


5. When my face‘s deadly pallor and my cooling body strikes fear into those dear to me: Lord, have mercy upon me.

Read the rest here.

David Cameron: Unrestricted immigration threatens our way of life

David Cameron will claim today that uncontrolled immigration has undermined some British communities.

In his most forthright speech on the issue since he became Prime Minister, he will say that mass immigration has led to "discomfort and disjointedness" in neighbourhoods because some migrants have been unwilling to integrate or learn English.

Pledging to cut the numbers entering Britain to tens of thousands, rather than hundreds of thousands, Mr Cameron will say that "for too long, immigration has been too high".

He will also promise to "stamp out" forced marriages, saying that "cultural sensitivity" cannot be allowed to stop the Government from acting.

Read the rest here.

The Young Fogey: Britain and Commonwealth nations in discussions over law of succession

The Young Fogey (no not that one, this one) reports in a television interview that there are very discreet discussions going on between No. 10 and the governments of the sixteen Commonwealth Nations that recognize the British Monarch as their head of state over possible changes in the laws of succession.  According to the Statute of Westminster any change in the law of succession would have to be agreed on unanimously by all of the member states.  Two changes in particular are seen as enjoying enormous public support.  The first would be to strip the preference for male succession in favor of the first born child of the sovereign, irrespective of gender.  Currently it is the first born male child with a female succeeding only if there is no son.  And the second would be to remove the prohibition against Roman Catholics from succeeding to the throne.  This prohibition has been in place since the overthrow of James II, a Catholic, in the (not so) Glorious Revolution of 1688 in favor of his daughter and son in law Mary and William (II/III) of Orange who were Protestants. 

While the changes under discussion are popular according to polls, implementing them would be tricky.  If unanimous consent were not obtained it could create a situation where in the future one of the Commonwealth states could wind up with a different monarch than the rest.  It is also feared that republicans in some countries, especially Australia, might seize on any proposed changes as an opportunity to abolish the monarchy altogether.

Neither of these proposed changes would affect the current line of succession. 

Most Mutual Funds Are Ripping You Off, Says IFA’s Mark Hebner

Source.

I am generally very cautious when it comes to offering any specific advice on investments and have almost never done so on here.  That said, I will give a thumbs up to Hebner's comments.  Anyone interested in the subject is encouraged to do a little research or just read any of the works by Jack Bogle.  Yes, there are a VERY few exceptions, but in general I don't like managed mutual funds, especially when it comes to stocks.  Low cost index funds are almost always your best long term investment for stocks.

They give you instant diversification (a broad based index), added security (individual companies could go belly up, whereas an index might take a hit but you will never lose all your money in one), and the costs are much lower than managed funds.  Fees and expenses matter.  They cut into your long term profits big time because they detract from your compound returns. And then again you come back to a mountain of data and studies going back decades that show index funds outperforming actively managed mutual funds or privately managed portfolios.

Breaking News: Barry Bonds guilty of obstruction of justice

SAN FRANCISCO - Barry Bonds was found guilty of obstruction of justice Wednesday, but a jury failed to reach a verdict on three other counts that the home run king lied to a grand jury in 2003 when he specifically denied that he knowingly used steroids and human growth hormone.

Following a 12-day trial and almost four full days of deliberation, a jury could not reach a unanimous vote on three of four counts, a messy end to a case that put the slugger in the spotlight for more than three years.

Bonds sat stone-faced through the verdict, displaying no emotion.

Read the rest here.

Note: This is a breaking story so the text of the linked article is likely to change.

Banks facing $3.6 trillion 'wall of maturing debt', IMF Global Financial Stability Report says

Debt-laden banks are the biggest threat to global financial stability and they must refinance a $3.6 trillion "wall of maturing debt" which comes due in the next two years, the International Monetary Fund said in its Global Financial Stability Report.

Many European banks need bigger capital cushions to restore market confidence and help reduce the risk of another financial crisis, according to the IMF's report, published on Wednesday.

Banks around the world are facing a $3.6 trillion "wall of maturing debt" coming due in the next two years, and the rollover requirements are most acute for Irish and German banks, the report said.

"These bank funding needs coincide with higher sovereign refinancing requirements, heightening competition for scarce funding resources," the IMF said.

Read the rest here.

Obama unveils framework for cutting deficit by $4 trillion over 12 years

President Obama urged lawmakers Wednesday to reduce borrowing by $4 trillion over the next 12 years by cutting spending and raising taxes on the wealthy. But he steered clear of fundamental changes to Medicare, Medicaid and Social Security — the primary drivers of future spending.

The proposal, announced at an afternoon speech at George Washington University, falls short of targets set by Obama’s deficit commission and House Republicans. But it builds on the budget blueprint he sent to Congress in February and revises that plan to include many recommendations from the bipartisan fiscal commission he appointed last year.

The plan is the president’s most ambitious effort yet to claim the mantle of deficit cutter, and he is seeking deep new cuts to domestic and military spending.

Obama also called on congressional leaders to appoint a panel of 16 lawmakers who would develop a concrete spending plan under the leadership of Vice President Biden. The group would report back with an agreement by the end of June, just before a crucial deadline on extending a limit on how much the country can borrow.

Read the rest here.

So far I have seen nothing serious from either party. It's politics as usual. Fasten your seat-belts folks, we are going over the cliff.

Say it aint so! "Study: Banks hiding fee info, skirting law"

There's only one way to get the best price on a service: Shop around. And there's only one way to shop around: Compare prices. But banking consumers who try to engage in this pillar of free market economic activity often simply can't, according to a study released Tuesday by a consumer group.

At nearly one in four banks, consumers can't learn the price of doing business because fee schedules are unavailable before they sign up, according to the Public Interest Research Group (PIRG), which conducted the study. Those banks are breaking the Truth in Savings Act, which requires such up-front fee disclosures, it said.

The results are all the more concerning because they mirror results from a similar study conducted by Congress' Government Accountability Office three year ago, which spurred government regulators to reiterate banks’ obligation to offer fee disclosures in 2010.

PIRG conducted an extensive "secret shopper" study to craft the report, “Big Banks, Bigger Fees: A National Survey of Bank Fees.” PIRG sent staff members to 392 banks and credit union branches in 21 states and reviewed online fees at banks over the past six months.

Only 38 percent of banks produced fee schedules after the first request, PIRG found. After three requests, compliance jumped to 55 percent. Still, about one-quarter of banks provided incorrect information and 23 percent never produced fee information at all, it said.

Read the rest here.

Once again... All together now;  "BANKS ARE THE ENEMY!"

150 Years Ago

Confederate artillery opens fire on the United States flag and military garrison at Fort Sumter.

"The firing upon that fort will inaugurate a civil war greater than any the world has yet seen. Mr. President, at this time it is suicide, murder, and will lose us every friend at the North. You will wantonly strike a hornet's nest which extends from mountains to ocean and legions now quiet will swarm out and sting us to death. It is unnecessary; it puts us in the wrong; it is fatal."

-Robert Toombs: Confederate Secretary of State to President Jefferson Davis on learning of plans to attack Fort Sumter.

Brother can you spare a Trillion?