How valuable is the exorbitant privilege? The ratings downgrade of US sovereign debt has not erased the dollar’s special position – as the numeraire of international transactions, the currency of choice for storing trade surpluses and the instinctive home for money in troubled times. But it is a forceful reminder that the special status could some day be lost.
The main beneficiaries of the privilege are US government bonds and the dollar. The former’s gain can be estimated with a global return forecasting factor (GFF), as set out in a paper by Rebecca Hellerstein of the New York Federal Reserve. She used clever statistical techniques to isolate the effect of global risk appetite on the gap between short- and long-dated US Treasury yields. The result: at times of cross-border investor confusion or stress – including all of the last year – the GFF has shrunk this gap by 25-50 basis points. In other words, if investors with worries and countries with trade surpluses stopped considering US Treasuries to be safe, yields on 10-year would be as much as half a percentage point higher.
How Obama has Disappointed The World
He was constrained by a number: 140, the maximum characters a Twitter message can contain. On a recent Wednesday afternoon, it was US President Barack Obama’s own, self-imposed limit. Obama was hosting a “Twitter Town Hall Meeting” in the East Room of the White House, where he hoped to explain his policies through the new medium.
It’s a challenge for a politician to restrict his comments to 140 characters, especially during a budget crisis in which anger and shouting seemed to prevail over actual arguments.
“I’m going to make history here as the first president to live tweet,” Obama said with an amused smile, as he walked up to a laptop adorned with the presidential seal. These were big words for a particularly insignificant event.
Obama has always managed to win over Americans with big words. He used big words to raise expectations and establish a mood of change in the 2008 presidential election campaign, when he inspired the country with his slogan “Yes, we can.”
German Police Call Airport Full-Body Scanners Useless
AFP:
BERLIN — Body scanners being tested at Germany’s Hamburg airport have had a thumbs down from the police, who say they trigger an alarm unnecessarily in seven out of 10 cases, a newspaper said Saturday.
The weekly Welt am Sonntag, quoting a police report, said 35 percent of the 730,000 passengers checked by the scanners set off the alarm more than once despite being innocent.
The report said the machines were confused by several layers of clothing, boots, zip fasteners and even pleats, while in 10 percent of cases the passenger’s posture set them off.
Software models nepotism
That’s because Allesina has created a computer model that can determine the frequency of nepotism in hiring. He applied it to academic life in Italy, but the same model could just as easily be applied to political hiring here.
“I wanted to keep it simple so anyone with a laptop can repeat it,” he told us. “What I wanted to show was that it’s not a few bad apples. I wanted to show the magnitude.”
His findings, published in the online journal PLoS ONE, proved that nepotism is widespread among academics in Italy, and now the Italian media are all over it. But what about Chicago?
US borrowing tops 100% of GDP: Treasury
AFP:
US debt shot up $238 billion to reach 100 percent of gross domestic project after the government’s debt ceiling was lifted, Treasury figures showed Wednesday.
Treasury borrowing jumped Tuesday, the data showed, immediately after President Barack Obama signed into law an increase in the debt ceiling as the country’s spending commitments reached a breaking point and it threatened to default on its debt.
The new borrowing took total public debt to $14.58 trillion, over end-2010 GDP of $14.53 trillion, and putting it in a league with highly indebted countries like Italy and Belgium.
Hamburg rejects Facebook facial recognition
The Hamburg data protection authority on Tuesday ruled that Facebook’s facial recognition feature, which attempts to identify people in photos uploaded to the site, violates German privacy laws.
Johannes Caspar, the head of the authority, said Facebook should not be collecting users’ biometric data – such as their face shape and the distance between their eyes – without getting their explicit consent. He has demanded that the social networking site change or disable the feature. All data collected so far should be deleted.
Mr Caspar has given Facebook two weeks to respond. If the company is unable to make changes, Mr Caspar said the Hamburg authority would consider bringing legal action against it. The German courts can impose fines of up to €300,000 ($426,397) for privacy breaches.
Inside North Korea
Earlier this year, David Guttenfelder, chief Asia photographer for the Associated Press, along with Jean H. Lee, AP bureau chief in Seoul, were granted unprecedented access to parts of North Korea as part of the AP’s efforts to expand coverage of the isolated communist nation. The pair made visits to familiar sites accompanied by government minders, and were also allowed to travel into the countryside accompanied by North Korean journalists instead of government officials. Though much of what the AP journalists saw was certainly orchestrated, their access was still remarkable. Collected here are some of Guttenfelder’s images from the trip that provide a glimpse of North Korea. [37 photos]
Amazon Battles States Over Sales Tax
SEATTLE—Amazon.com Inc., the world’s largest online retailer, hasn’t charged sales tax in most states since its founding in 1994. And it has taken some extreme measures to keep it that way.
Among them: Staff traveling around the U.S. have been required to first consult a company map that shades each state red, yellow or green, said three people who have worked for the retailer. These people said they needed permission from managers or company lawyers before entering “red” states because a worker’s actions might trigger laws that force Amazon to collect taxes in those states.
Baader-Meinhof terrorist may have worked for the Stasi
He is one of the most paradoxical and notorious figures in modern German history: a social democrat lawyer turned leftwing terrorist who went to prison, turned to Maoism and then came out as a far-right nationalist.
Now there is another twist: Horst Mahler, a founding member of the Red Army Faction, was also a Stasi informant.
According to German newspaper reports, the revelation comes from a leaked report by state prosecutors re-investigating the shooting of a pacifist by a Berlin policeman during a 1967 protest.
It’s Negotiation Time
It doesn’t seem like it’s been four years since the last time Detroit automakers and the United Autoworkers Union negotiated a new contract. You may remember the discussions and agreements that, from the date of that contract, gave the automakers the right to hire many categories of workers and pay them $14 an hour, plus lesser benefits. Of course, the auto companies were facing the same issues as any other major industry in America; the issue squeezing their corporate bottom lines most painfully was the incredible rise in the cost of workers’ health care.
Then many national media outlets were reporting that Detroit was paying their workers more than $73 an hour for their labor. Yet not only did an influx of autoworkers not buy new homes in Westover Hills or Monticello, but that simplistic look at the net cost of factory work ignored more pertinent realities of car production and corporate accounting.
Well worth reading.