(RED) For World AIDs Day.


Product (RED) lit up monuments all around the world to raise awareness of a global initiative to end mother-to-child transmission of the AIDs virus by 2015. You can view the pictures here. The lighting of Niagara Falls is spectacular.

As stated previously on this blog, my wife, Susan Smith Ellis, is the CEO of Product (RED).

Maybe Next Year


The National Commission on Fiscal Responsibility and Reform labored mightily and produced a very good first draft of a deficit reduction plan. It did not, however, attract the necessary votes to force Congressional action. So the can gets kicked down the road yet again. How long is the road?

Hedge Funds At The Window.


The basic argument for lax regulation of hedge funds is that they don't need it. Rich people and institutions invest money in hedge funds and if it doesn't work out, well, too bad. It's a free market. They're not too big to fail.

Except, of course, when they were about to fail. Then they got loans from the Fed.

This is not to say that the Fed erred in propping up a bunch of hedge funds. Keeping the global financial system from meltdown was Job One. The Fed probably did more than enough to keep that from happening and that was, given the situation and the known facts at the time, the right thing to do.

But the shadow banking system and its hedge fund off-shoots needed trillions of dollars to stay afloat in the latter half of 2008 and the first half of 2009. The argument for allowing it to carry on as before has long since become untenable.

Afghanistan.


The more you know, the more depressing it is.

The First Signs of Trouble.


What happens when states cut "transfer" payments to municipalities to balance the books. Cops and firemen get laid off. And suddenly a lot of vulnerable people are more vulnerable.

How Bad Was It, Part 2


How dire were the straits in the latter half of 2008 and the first half of 2009? Consider the following two paragraphs from a Financial Times story posted this evening:


More than 36 per cent of the cumulative collateral pledged to the US central bank in return for overnight funding under the Primary Dealer Credit Facility was equities or bonds ranked below investment grade. A further 17 per cent was unrated credit or loans, according to a Financial Times analysis of Fed data released this week.

Only 1 per cent of the collateral was Treasury bonds which are normally used in transactions between banks and the monetary authorities.

The Way We Were.


Rather, the point is that the Fed bail-outs were hair-raisingly enormous, and that neither the regulators nor the regulated should be allowed to forget that. Wall Street institutions that now walk tall again survived only because the taxpayers saved them. Goldman Sachs turned to the Fed for funding on 84 occasions, and Morgan Stanley did so 212 times; Blackrock, Fidelity, Dreyfus, GE Capital – all of these depended on taxpayer backstops. The message from this data dump is that, two years ago, these too-big-to-fail behemoths drove the world to the brink of a 1930s-style disaster – and that, if regulators don’t break them up or otherwise restrain them, they may do worse next time.


--Sebastion Mallaby, in the FT

E.T. Phone Home.


NASA today will announce that it has found arsenic microbes in space, according to a friend of mine who is usually well-informed on these matters. The announcement is scheduled for 2pm Eastern Time today.

Pushing life to extremes, researchers reported Thursday that they have discovered microbes able to subsist almost entirely on arsenic, which "very likely" incorporate it into their DNA. The finding may be the first exception to the formula long thought to govern the basic chemistry of life.

Force-grown in the laboratory, these bacteria use the notorious poison to replace molecules of the element phosphorus in critical parts of their working biology, including in the spiral backbone of DNA, which is a crucial component for all known life, the researchers said. By depending on an element so toxic to normal life, the microbes are a living demonstration of the exotic substances that alien biochemistry might, in theory at least, use on other worlds.

-- From wsj.com.

The previous version was almost completely wrong. Except the headline. The headline was great, don't you think? So original...

How Bad Was It?


How close did we come to a complete meltdown of the financial system in the autumn of 2008?
In a word: very. So much data was released today by the Federal Reserve that it will take time to sort through it all. But here's one snippet: Goldman Sachs had to borrow $600 billion to shore up its positions.

Two Adults In Washington.


Senators Hugh Gregg (R-NH) and Kent Conrad (D-ND) today endorsed the recommendations of The National Commission On Fiscal Responsibility and Reform.

It's a start.

For a full copy of the Commission report, click here.

Sweet Home Alabama.

No municipality has ever successfully reduced its pension debt through bankruptcy. Prichard, Alabama, a suburb of Mobile, may change that. It's the case everyone in the world of municipal bonds is watching very closely.

The End of Something Terrible.


We can end mother-to-child transmission of the AIDS virus by the year 2015. Product (RED) and the Global Fund see that goal within reach. What a great thing that would be.

You can buy (RED)-marked products by clicking here. A portion of the profits from the sale of (RED)-marked products goes to the Global Fund.

Full disclosure: My wife, Susan Smith Ellis, is the CEO of Product (RED).

And Then Book Publishing Changed Forever.


Google (finally) announced its long-awaited venture into electronic publishing. It's called Google Editions. It is device agnostic. Every retailer except Amazon has to come to terms with the new reality.

"More Stars In Our Flag."


Back in 1992, on the op-ed pages of The Los Angeles Times, Walter Mead put forth a "modest proposal" for US foreign policy at the dawn of the post-Cold War era. He proposed that the United States buy Siberia from the Russians, whose president at that time, Boris Yeltsin, was shopping it to bring in much-needed cash. Mead's proposal was a brilliant idea; a kind of Louisiana Purchase for the modern era. Too bad nothing ever came of it.

Yesterday, Ambrose Evans Pritchard argued that Germany should unite with (read: acquire) Spain to forestall economic disaster within the Eurozone. The contagion, Evans Pritchard wrote, has long since gotten out of hand. Drastic times call for unconventional ideas. Nothing will ever come of his idea either.

Here in the United States, we are on the doorstep of truly dire straits. The Federal government is broke. Many of the states are near bankruptcy. Large numbers of our leading cities teeter on the edge of insolvency. Taxpayers are tapped out. Most everyone is poorer than they were just 3 years ago. And our political elites can't even agree on an earmark ban.

The "big short" in 2007-2008 was betting against the housing market. The "big short" of 2011-2012 will be betting against state and municipal debt. It will be hair-raising. No one really knows what the outcome will be. The one thing we know for sure, as former Clinton White House chief of staff Erskine Bowles said recently, is that if strong remedial action is not taken, "the markets will come. They will be swift, and they will be severe, and this country will never be the same."

For the moment, we seem almost resigned to this outcome. There is no reason we should be. We just need to think bigger and act boldly.

Step one would be a merger of the United States and Canada. That would ensure all the food and all the energy the combined entity would ever need. Then we need to revisit the idea of acquiring Siberia. Making Siberia part of the United States and Canada would ensure all the raw materials we could ever possibly use. More important, it would give us a vast new frontier; a tabula rasa upon which to build new cities, new roads, new railways, new information highways. And it would give us a warm water port (Vladivostok). And a physical (read: military) presence just north of China.

We're not going to get out of this mess by playing small ball. We need to fundamentally change the dynamic of history. The way to do that is to redraw the map.

A Kind of No Man's Land

What's it like to live along the border of the United States and Mexico? Cecilia Balli reports:

Then I picked up the latest issue of the magazine Proceso, where an article by reporter Marcela Turati described the mayhem that recently befell Tamaulipas after special forces gunned down a top capo for the Gulf Cartel in Matamoros, across the international line from my hometown. (The University of Texas at Brownsville, where I have an office, had to be locked down for the weekend because of the prospect of bullets flying over the Rio Grande.) The government claimed Ezequiel Cárdenas Guillén’s death as a major victory, and President Obama phoned Calderón to personally congratulate him. But the residents of Tamaulipas felt the fallout immediately.


The following day, the rival group known as the “Zetas” papered Matamoros with recruitment fliers. And a few days later, they raided Ciudad Mier, a border town formerly controlled by the Gulf, where they burned police buildings and forced the remaining several dozen residents to run for their lives. Those who didn’t have the resources to escape to Texas sought cover in nearby Ciudad Alemán, where they huddled on the ground of the Mexican government’s first shelter for drug war refugees.

Read the whole thing. (via Kausfiles)