The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

Beginning today with the March Conference Board Consumer Confidence figure (key employment questions included), economic data will start to reflect the late Feb spike in oil prices and the human and economic reverberations of the March 11th Japanese earthquake so we can thus start the process of better quantifying the impacts. Specifically with gasoline prices and its effect on consumer spending, AAA said the average gallon yesterday hit $3.59, the most since Oct ’08 and is just .52 from the record high in July ’08 as we are just a few months from the beginning of the summer driving season. Since the Libya unrest began in earnest, prices are up .40 which equates to about $56b of extra gasoline spending annualized. In Europe, elevated inflation data out of Germany has likely clinched a rate hike next week from the ECB and the German Finance Minister said Portugal will most likely get a bailout in June when their new government is in place.

The two bits of regulation are at tension with each other. One bit is saying you should have more funding with a longer duration and the other is saying watch out when buying this stuff if you are an insurance company. It’s a big problem for banks.”

-Simon Hills, an executive director at the British Bankers’ Association

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Why all the sturm und drang about bank capital? A recent report from McKinsey (?) stated that current business models project European banks “will have a long-term liquidity shortfall of 2.3 trillion euros in eight years.”  That’s equal to half the banks’ total capital and liquidity deficit under Basel III. For comparison’s sake, the U.S. banks’ deficit is 2.2 trillion euros.

Enter “European Union’s Solvency II regulations.” These are supposed to be implemented in 2013. The rules create a conflict between insurers, who tend to buy bank bonds, and banks, who need to raise capital.

Bloomberg explains:

“European banks are being forced to sell more long-term bonds as regulators seek to prevent another financial crisis. European insurers say their own regulator will stop them from buying such debt.

Basel III’s liquidity rules mean European banks may need to raise as much as 2.3 trillion euros ($3.2 trillion) in long-term funding, according to New York-based McKinsey & Co. Insurers, the biggest buyers of such debt, are being dissuaded from buying long-term bonds under the European Union’s Solvency II rules, which makes them more expensive to hold.”

Even without new solvency rules, bank regulators seem to be struggling to entice insurers to buy new bank bonds. Given how well bank management has managed risk the past decade, can you blame the lack of appetite on Insurers?

This issue is likely to impact numerous other issues — the end of ZIRP, regulatory changes, banl capital rules, even FASB 157 — may see the impact of these bank capital rules . . .

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Source:
European Bank Funding Threatened as Basel III Meets Solvency II
Kevin Crowley
Bloomberg, March 29 2011
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aSs2opdNoafw&pos=1

My first digital camera was a Casio. It had several advantages over other digital cameras, but most noteworthy were the very fast shutter speed (less of the usual lag) and very competitive price (~$250 when the competitors were mostly $300+)

The prices have plummeted, and these cameras are now so cheap as to be near disposable:

Casio EX-Z550 14.1MP Digital Camera with 4x Wide Angle Zoom with CCD Shift Image Stabilization and 2.7 inch LCD

Amazon one day sale: $79.00

Washington’s Blog strives to provide real-time, well-researched and actionable information.  George – the head writer at Washington’s Blog – is a busy professional and a former adjunct professor.

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Apologists for the type of old, unsafe nuclear reactors which are leaking in Japan argue that the amount of radiation released from Fukushima is small compared to the amount of “background radiation”.

There Are NO Background Levels of Radioactive Caesium or Iodine

Wikipedia provides some details on the distribution of cesium-137 due to human activities:

Small amounts of caesium-134 and caesium-137 were released into the environment during nearly all nuclear weapon tests and some nuclear accidents, most notably the Chernobyl disaster. As of 2005, caesium-137 is the principal source of radiation in the zone of alienation around the Chernobyl nuclear power plant. Together with caesium-134, iodine-131, and strontium-90, caesium-137 was among the isotopes with greatest health impact distributed by the reactor explosion.

The mean contamination of caesium-137 in Germany following the Chernobyl disaster was 2000 to 4000 Bq/m2. This corresponds to a contamination of 1 mg/km2 of caesium-137, totaling about 500 grams deposited over all of Germany.Caesium-137 is unique in that it is totally anthropogenic. Unlike most other radioisotopes, caesium-137 is not produced from its non-radioactive isotope, but from uranium. It did not occur in nature before nuclear weapons testing began. By observing the characteristic gamma rays emitted by this isotope, it is possible to determine whether the contents of a given sealed container were made before or after the advent of atomic bomb explosions. This procedure has been used by researchers to check the authenticity of certain rare wines, most notably the purported “Jefferson bottles”.

As the EPA notes:

Cesium-133 is the only naturally occurring isotope and is non-radioactive; all
other isotopes, including cesium-137, are produced by human activity.

So there was no “background radiation” for caesium-137 before above-ground nuclear testing and nuclear accidents such as Chernobyl.

Japan has already, according to some estimates, released 50% of the amount of caesium-137 released by Chernobyl, and many experts say that the Fukushima plants will keep on leaking for months. See this and this. The amount of radioactive fuel at Fukushima dwarfs Chernobyl.

Likewise, iodine-131 is not a naturally occurring isotope. As the Encyclopedia Britannica notes:

The only naturally occurring isotope of iodine is stable iodine-127. An exceptionally useful radioactive isotope is iodine-131…

And New Scientist reports that huge quantities of iodine-131 are being released in Japan:

Austrian researchers have used a worldwide network of radiation detectors – designed to spot clandestine nuclear bomb tests – to show that iodine-131 is being released at daily levels 73 per cent of those seen after the 1986 disaster.

(Indeed, some experts are saying that the amount of radioactivity released in Japan already exceeds Chernobyl.)

Naturally-Occurring Radiation

There are, of course, naturally occurring radioactive materials.

But lumping all types of radiation together is misleading … and is comparing apples to oranges.

As the National Research Council’s Committee to Assess the Scientific Information for the Radiation Exposure Screening and Education Program explains:

Radioactivity generates radiation by emitting particles. Radioactive materials outside the the body are called external emitters, and radioactive materials located within the body are called internal emitters.

Internal emitters are much more dangerous than external emitters. Specifically, one is only exposed to radiation as long as he or she is near the external emitter.

For example, when you get an x-ray, an external emitter is turned on for an instant, and then switched back off.

But internal emitters steadily and continuously emit radiation for as long as the particle remains radioactive, or until the person dies – whichever occurs first. As such, they are much more dangerous.

Dr. Helen Caldicott and many other medical doctors and scientists have confirmed this. See this and this.

Read the rest of this entry »

The 2 yr note auction was light as the yield was above the when issued and the bid to cover of 3.16 was below the 12 month average of 3.33 and the 2nd lowest dating back to last August. Impacting the bidding positively on one hand was likely the Japanese disaster and subsequent negative impact it may have on global economy activity and the Middle East unrest too but on the other hand where buyers may have stepped back to result in a mediocre auction, maybe, just maybe, the comments from Plosser on Friday and Bullard on Saturday had an impact that while the Fed is NOT raising rates any time soon, they really mean it that QE2 may not be followed by QE3.

I mentioned this on Bloomberg early this morning, but its worth exploring further: What is the average half life of your favorite technology?

We operate under the false assumption of substance and solidity, when in reality, things are deeply in flux. Everything changes, nothing lasts.

The various technologies we use are physical manifestations of ideas, but the reality is that most of these concepts are replaced after a very short period of time.

Consider that live performers was how we heard music for 10,000 plus years; then albums (~75 years ), then a variety of tape media (Reel-to-reel, cassettes, 8 Track, DAT), then CDS, and now those shiny silver discs are being replaced with MP3s and AAC lossless.

Consider these other technologies — how long are they likely to be around?

-Books

-Internal combustion engine

-Broadcast Television

-Organ Transplants

-PCs

-Cell phones

-Screen touch/Swipe

-Credit Cards

What is the Half Life of Your Favorite Technology?

Via Good, comes this graphic looking at the relationship between education and income:

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click for larger graphic

TMB bank have launched a new brand vision “Make THE Difference” by making a film to inspire people to start thinking differently. With a hope that they will start to Make THE Difference to their own world. It doesn’t have to be big, but a little can create positive changes. This film is based on a true story. In 1986 a football team that lived on a little island in the south of Thailand called “Koh Panyee”. It’s a floating village in the middle of the sea that has not an inch of soil. The kids here loved to watch football but had nowhere to play or practice. But they didn’t let that stop them. They challenged the norm and have become a great inspiration for new generations on the island.

From the St. Louis Fed’s FRASER system, via FT Alphaville, comes this crazy delightful super-big chart porn, showing an enormous run of market inputs over time.

Good wonky fun!

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1917-19 War and its aftermath

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1929-31: Depression & Crash

75 Years of American Finance: A Graphic Presentation 1861-1935