As recovery starts to stall in the US and Europe with echoes of mid-1931, bond experts are once again dusting off a speech by Ben Bernanke given eight years ago as a freshman governor at the Federal Reserve.
Entitled “Deflation: Making Sure It Doesn’t Happen Here”, it is a warfare manual for defeating economic slumps by use of extreme monetary stimulus once interest rates have dropped to zero, and implicitly once governments have spent themselves to near bankruptcy.
The speech is best known for its irreverent one-liner: “The US government has a technology, called a printing press, that allows it to produce as many US dollars as it wishes at essentially no cost.”
Bernanke began putting the script into action after the credit system seized up in 2008, purchasing $1.75 trillion of Treasuries, mortgage securities, and agency bonds to shore up the US credit system. He stopped far short of the $5 trillion balance sheet quietly pencilled in by the Fed Board as the upper limit for quantitative easing (QE).
Investors basking in Wall Street’s V-shaped rally had assumed that this bizarre episode was over. So did the Fed, which has been shutting liquidity spigots one by one. But the latest batch of data is disturbing.
Category: History
Vintage Trek Bike
“Forgotten Places” – Native American Mounds at Madison’s Elmside Park
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Worldwide Panorama is collecting panoramic scenes with the theme “Forgotten Places”. Nancy suggested Madison’s Elmside Park. Here it is.
From Native American Mounds in Madison and Dane County (A Madison Heritage Publication):
At the corner of Lakeland Avenue and Maple Avenue overlooking Lake Monona are two well-preserved Late Woodland animal effigies now referred to as a lynx and a bear. These mounds were originally part of a dense and extensive cluster of mounds that extended along the north shore of Lake Monona. Once part of the Simeon Mills farm, this site was still a favored Winnebago campground as late as the late 19th century. Most of the mound cluster, which included a bird effigy with a reported wingspan of 568 feet, was destroyed by turn-of-the-century residential development. Nearby, the beautiful sculpture, entitled “Let the Great Spirits Soar,” was carved by Harry Whitehorse, a Winnebago whose ancestors have lived in the Four Lakes area for hundreds of years. The sculpture was carved from a storm-damaged hackberry tree and honors his Indian ancestors and the effigy mound builders.
“The Time We Have is Growing Short”
If we need any further illustration of the potential threats to our own economy from uncontrolled borrowing, we have only to look to the struggle to maintain the common European currency, to rebalance the European economy, and to sustain the political cohesion of Europe. Amounts approaching a trillion dollars have been marshaled from national and international resources to deal with those challenges. Financing can buy time, but not indefinite time. The underlying hard fiscal and economic adjustments are necessary.
As we look to that European experience, let’s consider our own situation. We are not a small country highly vulnerable to speculative attack. In an uncertain world, our currency and credit are well established. But there are serious questions, most immediately about the sustainability of our commitment to growing entitlement programs. Looking only a little further ahead, there are even larger questions of critical importance for those of less advanced age than I. The need to achieve a consensus for effective action against global warming, for energy independence, and for protecting the environment is not going to go away. Are we really prepared to meet those problems, and the related fiscal implications? If not, today’s concerns may soon become tomorrow’s existential crises.
I referred at the start of these remarks to my sense five years ago of intractable problems, resisting solutions. Little has happened to allay my concerns. But, of course, it is not true that our economic problems are intractable beyond our ability to react, to make the necessary adjustments to more fully realize the enormous potential for improving our well-being. Permit me a note of optimism.
A few days ago, I spent a little time in Ireland. It’s a small country, with few resources and, to put it mildly, a troubled history. In the last twenty years, it took a great leap forward, escaping from its economic lethargy and its internal conflicts. Responding to the potential of free and open markets and the stable European currency, standards of living have bounded higher, close to the general European level. Instead of emigration, there has been an influx of workers from abroad.
Strolling Through 19th Century London Today
Augmented reality might be the future, but my favorite application of it yet transports you far into past. StreetMuseum—an iPhone app from the Museum of London—overlays four hundred years of historic images on today’s city streets.
StreetMuseum makes creative use of Google Maps and geo-tagging to show users how London used to look. You can use it to check out pictures and info about nearby historic locations, which is has more of a straightforward walking tour feel. But the fun starts when you’re actually standing in front of a location in the database. That’s when the AR “3D view” kicks in, with views that may look something like this:
Google has mapped every WiFi network in Britain
Google has mapped every wireless network in Britain in order to use the information for commercial purposes, it has emerged.
Every WiFi wireless router – the device that links most computer owners to the internet – in every home has been entered into a Google database.
The information was collected by radio aerials on their Street View cars, which have now photographed almost every home in the country.
The data is then used on Google’s Maps for Mobile application to locate mobile phones such as iPhones in order for users to access information relevant to the area such as restaurants, cinemas, theatres, shops and hotels.
The project had remained secret until an inquiry in Germany earlier this month in which Google was forced to admit that it “mistakenly” downloaded emails and other data from unsecured wireless networks where they we
The Tragic Race to be First to the South Pole
In 1910, two men set out to be the first to reach the South Pole in a race that would be both heroic and tragic. The men had different reasons for their journeys, took different routes and made different decisions that would ultimately seal their respective fates, and those of their teams.
The American Museum of Natural History delves into this storied event to bring visitors as close as possible to this historic event and the people involved in their new exhibit, “Race to the End of the Earth,” starting May 29. Artifacts, photographs, replicas and models give life to the two rivals and their treacherous 1,800-mile marches to the center of Antarctica.
Robert Falcon Scott set off from Wales on July 15, 1910 on what was originally intended to be a primarily scientific expedition, but which quickly morphed into a quest to make history on behalf of the British Empire.
Meanwhile, Norwegian explorer Roald Amundsen, whose plan to reach the North Pole first had been thwarted by both Frederik Cook and Robert Peary, had secretly turned his sights on the South Pole. He left Oslo in June 3, 1910 with the intent of beating Scott to his goal.
Understanding the Greek Aftershocks
Given the tragic events in Greece and the financial contamination of other eurozone peripheral countries, most people now recognize that sovereign risk matters and it matters a great deal. Unfortunately, the recognition lag has already caused significant damage, including forcing the current approach to European integration to an historical juncture.
What is less well understood at this stage is that the externalities, negative and positive, are not limited to Europe. It is only a matter of time when this issue, too, becomes a driver of policies and market valuations and correlations.
The general context is critical here, and should never be forgotten. As argued in my March 11 FT commentary, the sovereign debt explosion in industrial countries involves a regime shift with consequential long-lasting effects. And what is happening in Europe is yet another illustration how, in our highly interconnected world, previously unthinkable phenomena can become reality in a surprising and highly disruptive manner.
Rather than just observe, other countries are well advised to understand the debt dynamics at play. They should draw the appropriate policy implications given their own debt burdens, maturity profiles and funding sources.
They must also go well beyond this.
This Time Its Different
800 years of financial crises – Carmen Reinhart, co-author of This Time is Different, talks about the history of financial crises and their patterns
Video.
The decline of the Great Writ: The sad history of habeas corpus
Habeas Corpus: From England to Empire. By Paul Halliday. Harvard University Press; 502 pages; $39.95 and £29.95. Buy from Amazon.com, Amazon.co.uk
WHEN discussing habeas corpus or the “Great Writ of Liberty”, as the most revered legal device of the Anglophone world is often known, jurists and civil libertarians tend to become misty-eyed. In 1777 Charles James Fox, a radical British politician, described habeas corpus during a parliamentary debate on its suspension as “the great palladium of the liberties of the subject” and deplored the “insolence and temerity” of those “who could thus dare to snatch it from the people”.
Nearly 230 years later, in an impassioned attack from the Senate floor on the Bush administration’s bill to suspend habeas corpus for anyone determined to be an “unlawful enemy combatant”, Barack Obama declared: “I do not want to hear that this is a new kind of world in which we face a new kind of enemy.” Another senator, Arlen Specter, roared: “The right of habeas corpus was established in the Magna Carta in 1215…what the bill seeks to do is set back basic rights by some 900 years.” In Britain, Lord Hoffmann, a law lord reviewing government “control orders” to detain terrorist suspects in 2007, thundered: “Such is the revulsion against detention without charge or trial, such is this country’s attachment to habeas corpus, that the right to liberty ordinarily trumps even the interests of national security.”