Battle Brews Over Texas Public Pensions, Group Seeks End of Defined benefit Plans

In a prelude for what will eventually happen in every state, a Battle brews over Texas public pensions.

Texas could be gearing up for its own Wisconsin-style grudge match over public employee benefits.



A group of high-powered Houston business leaders is starting a statewide campaign to overhaul retirement for future teachers, firefighters, police officers, judges and other state and local government workers.



"I think the state needs to get the hell out of this (pension) business completely," said lawyer Bill King , who is forming Texans for Public Pension Reform with others from the Greater Houston Partnership, an über-chamber of commerce with business members representing $1.5 trillion in assets.



Talmadge Heflin, former House appropriations chairman, agreed that it is probably too late for the pension reform group to be a major force in the 2012 elections.



But they could make waves during the 2013 legislative session, said Heflin, who has advocated for similar reforms as director of the Texas Public Policy Foundation's Center for Fiscal Policy.

Pension Haircuts Mandatory



Merely doing away with public defined benefit pension plans is insufficient. The article notes ...

In 2010, eight governors made pension reform a key campaign promise with the aim of cutting government spending and appealing to tea party supporters.



Yet not one has scrapped pensions this year in exchange for a 401(k)-style system, said Stephen Fehr, a researcher with the Pew Center on the States.



The problem is that states can't save money anytime soon by doing away with pensions.



In fact, it costs more in the midterm because taxpayers must contribute more to cover the benefits accrued by retirees and current workers because new workers would no longer be chipping in to the pension, Fehr said.



When a Texas Senate committee looked in 2008 at a similar pension conversion, the committee found no compelling reason to do so.



The state's Pension Review Board at the time estimated the combined contribution from the state and employees to the Employees Retirement System of Texas would have to rise from around 17 percent of payroll to as much as 30 percent if the pension were closed to new people.



In 30 years, the contribution rate would climb beyond 80 percent .

The first step is to stop the bleeding. The way to do that is to immediately kill defined benefit pension plans for all public employees.



The second step is to admit what has been promised cannot possibly be paid. Legislation that would allow public pension plans to go bankrupt may be needed.



Like it or not, one way or another, haircuts are coming. The sooner this is recognized and acted on, the smaller (and more equitable) the haircuts would be.



Mike "Mish" Shedlock

http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Value Restoration Project: Stock Market Valuations and Trends Over Time

I have written much about valuations of stocks recently, the bear market in stocks compression of PE ratios, and normalized earnings.



An associate, JJ Abodeely has been doing the same thing. His blog "Value Restoration Project" is dedicated to valuations and trends in valuations over time.



What follows is a JJ's most recent post in entirety, Are We There Yet? The Value Restoration Project Resumes



For readability purposes, I will not follow my normal "blockquote" process of quotes. What follows is from JJ, except where he quotes another source.



click on any chart in this post for sharper image



Are We There Yet? by JJ Abodeely



The declines in the stock market over the last three weeks have done a lot of damage to most investors' portfolios. This would merely be an inconvenience if it meant that future returns could be expected to be robust enough to compensate for the losses. In a July 22nd post which coincidentally, was the most recent top in the stock market, I suggested that "the conditions present in the market suggest that the Value Restoration Project in stocks, underway in fits and starts since 2000, will eventually resume."



Investors in the stock market may rightly be viewing this recent decline of about 12% over the last 16 trading days as a painful, but necessary, correction in prices which will once again bring value back to the market. After all, as I wrote in two recent missives, Expensive Markets Mean Low or Negative Prospective Returns and Denominators Matter

The fact is that what you pay matters and expensive markets today mean low or even negative prospective returns going forward. The value restoration project, which began with the peak of the stock market in 2000, is ongoing despite a 2 year cyclical rebound on the heels of unprecedented stimulus.



History however, suggests that market prices broadly will eventually resume declining relative to several denominators, in particular, normalized earnings and gold. Since late 2009, the market’s gain has been of a very different nature– not only have stocks actually declined versus gold and other currencies, but they have been powered by normalized valuations going from expensive (19-20x) to more expensive (23x). This makes the gains over the last year or so particularly vulnerable.

So, in the spirit of Summer driving season and family road trips, the recent market decline begs the question, "Are we there yet"? Unfortunately, checking in with some important valuation indicators suggests the decline of the last several weeks has not accomplished enough to merit a more aggressive long-term portfolio stance.



Normalized P/E Ratio







For most of the Spring, the S&P 500 traded between 1300 and 1350 and sported a normalized P/E ratio of around 23x trailing 10 year earnings. In Expensive Markets Mean Low or Negative Prospective Returns I noted that when the cyclically adjusted P/E ratio is between 22 and 24 the average annual real returns (after inflation) for the subsequent 10 years is -2.2%, the median is-3.1% and the distribution looked like this







With the S&P's recent decline to 1178, the Cyclically-Adjusted or "Shiller" P/E has decline from a recent high of 23.6 to a somewhat more palatable 20.4. This begs the question of what sort of long-term returns have investors historically seen when the market P/E stood at similar levels as today?



There have been 125 monthly occurrences since 1881 when the normalized P/E ratio was between 19 and 21. The average annual real return with dividends reinvested over the subsequent 10 year period is about 1.6%, with roughly a third of the 10 year periods resulting in negative returns.



While somewhat more encouraging, these are hardly the returns that dreams are made of-- or financial planning assumptions, for that matter. For those who prefer to see their probable outcomes expressed in nominal returns, the average is about 4.5%.









A thorough understanding of history suggests that today's P/E level is still not low enough to warrant a buy and hold or passive approach to U.S. stocks broadly. As Ed Easterling of Crestmont Research is fond of saying, "secular market cycles are not driven by time, but rather they are dependent upon distance—as measured by the decline in P/E to a low enough level to then enable a significant increase."



Considering that the most recent secular market is starting from a spectacularly overvalued normalized P/E of 43.8x in 2000, we have quite a bit farther to travel.







Stocks Priced in Gold



Like a normalized earnings measure, adjusting stock market prices for the effects of a nearly constantly depreciating currency, allows us to assign deeper meaning to price. Please consider my recent post Denominators Matter! What the Price of Gold Tells Us About the Value of Other Assets.



The good news is the stocks prices have become even cheaper when adjusted for gold. Amazingly, the nominal price gains since the market low in March of 2009 have now been completely lost, when adjusted for gold. While this is mainly good news for those who own gold, it also gives us insight into the process by which the market is returning to a level where real, long-lasting value can be seen.

Fellow contrarians or disciples of mean reversion may think that this trend is poised to reverse, however a longer-term perspective is in order. We can easily see the secular bull and bear cycles from this chart which shows the Dow Jones Industrials Stock Index adjusted for gold since 1969. The 7x rise in gold since 1999, coupled with the nominal price decline in the Dow or S&P 500, has gone along way towards rectifying the imbalances in the valuation of the two asset classes. However, history suggests that durable, decade long, market bottoms are made at much lower levels.

No, we are not there yet



The recent sell off in the markets have been fast and furious and it would not be surprising to see stocks recover some of the recent losses in the weeks and months ahead. However, as John Hussman wrote in Two One-Way Lanes on the Road to Ruin

It is important to recognize that the S&P 500 is presently only about 13% below its April peak, and the word "only" deserves emphasis...The main problem here is that we essentially have nowhere constructive to go on the upside - advisory sentiment is already overbullish, and despite the recent decline, our 10-year total return projection for the S&P 500 has still only climbed to 5.1% annually. The ensemble of evidence remains steeply negative here.

This evidence most certainly includes the long-term valuation measure discussed here. Investors who take steps to protect their portfolios from the inexorable value restoration project will be in position to benefit from the next real bull market in stocks.



End Value Restoration Post



Everything from "Are We There Yet?" to "End Post" is from JJ Abodeely's Value Restoration Project. If you wish to contact him, you can do so with a button on his blog.



Here are my posts regarding valuations, value traps, and earnings.



February 07, 2011: Negative Annualized Stock Market Returns for the Next 10 Years or Longer? It's Far More Likely Than You Think



March 15, 2011: Anatomy of Bubbles; Negative Returns for a Decade Revisited; Is Gold in a Bubble?



June 20, 2011: Value Traps Galore (Including Financials and Berkshire); Dead Money for a Decade



August 17, 2011: Earnings Collapse Coming Up; Don't Worry Companies Will Still "Beat the Street"; Value Traps and Road to Ruin



August 23, 2011: Another "Lost Decade" Coming Up; Boomer Retirement Headwinds; P/E Expansion and Contraction Demographic Model; Negative Returns for a Decade Revisited



Mike "Mish" Shedlock

http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

US In Recession Right Here, Right Now

I am amused by those who think a US recession will come within a year. Even more amusing are those who think a recession will not come at all.



The US is in a recession now. I am not the only one who thinks so.



Last Friday, I received an email from Rick Davis at Consumer Metrics, complete with an Excel spreadsheet that shows that had the GDP deflator been based on the consumer price index (CPI) rather than the BEA's measure of price inflation, the US would already be in the second quarter of contraction.



My friend Tim Wallace noted Davis' explanation would be consistent with Petroleum Distillates Demand Shows "Definite Economic Downturn Starting April/May 2011".



Thus Wallace was not surprised at all.



In the meantime, I received a set of emails from Doug Short. He had already charted what I was about to graph. Let's take a look.



The Deflator Makes Big a Difference



Please consider Will the "Real" GDP Please Stand Up? by Doug Short.

How do you get from Nominal GDP to Real GDP? You subtract inflation. The Bureau of Economic Analysis (BEA) uses its own GDP deflator for this purpose, which is somewhat different from the BEA's deflator for Personal Consumption Expenditures and quite a bit different from the better-known Bureau of Labor Statistics' inflation gauge, the Consumer Price Index.



I've updated my charts showing quarterly Real GDP since 1960 with the official and three variant adjustment techniques. The first chart is the official series as calculated by the BEA with the GDP deflator. The second starts with nominal GDP and adjusts using the PCE Deflator, which is also a product of the BEA. The third adjusts nominal GDP with the BLS (Bureau of Labor Statistics) Consumer Price Index for Urban Consumers (CPI-U, or as I prefer, just CPI). The forth chart, a recent addition prompted by several requests, adjusts nominal GDP using the Alternate CPI published by economist John Williams at shadowstats.com

The following charts are courtesy of from Doug Short.



Real GDP With GDP Deflator







Real GDP With CPI Deflator







Recession It Is



There you have it. That is what Tim Wallace spotted, that is what Rick Davis spotted, that is what Doug Short spotted.



No one really needed a chart for this.



I have been talking about a global slowdown for a long time. My only concern was if and when the NBER would agree to admit the obvious. I still do not know, but as I have stated before, I expect the NBER to backdate the recession to this quarter or next.



That is a guess, not a certainty.



Permanent Recession Since 1988?



Doug Short also produced a chart using the CPI as calculated by John Williams at ShadowStats. Here is that chart.







As much as I think GDP is nonsense (and I really do think it is nonsense, figuring the first 2% is hedonics and imputations), Williams carries the idea to ridiculous extremes.



Doug Short politely comments "I find this 'alternate Real' GDP to be interesting (in a freakish sort of way), but I personally see no credibility in the hyper-negative GDP is produces."



"Freakish" Hyperinflation Report



Please consider Williams' Hyperinflation Special Report (Update 2010)

Risks are high for the hyperinflation beginning to break in the year ahead; it likely cannot be avoided beyond 2014.



It is this environment of rapid fiscal deterioration and related massive funding needs, the U.S. dollar remains open to a rapid and massive decline and to the dumping of U.S. Treasuries. The Federal Reserve would be forced to monetize significant sums of Treasury debt, triggering the early phases of a monetary inflation. Under such circumstance multi-trillion dollar deficits rapidly would feed into a vicious, self-feeding cycle of currency debasement and hyperinflation.

Hyperinflation When?



That was written in 2009 with an update in 2010.



Amusingly in the Hyperinflation Special Report (2011) William comments on his timeline for hyperinflation.

Outside timing on the hyperinflation remains 2014, but there is strong risk of the currency catastrophe beginning to unfold in the months ahead. It may be starting to unfold as we go to press in March 2011, but moving into a full blown hyperinflation could take months to a year, beyond the onset, depending on the developing global view of the dollar and reactions of the U.S. government and the Federal Reserve. ...



The federal government and Federal Reserve’s actions in response to, and in conjunction with, the economic and financial crises of 2007, however, accelerated the ultimate process—both in terms of fiscal deterioration and global perception of the issues—moving the outside horizon for hyperinflation from 2018 to 2014.



Even so, over the last year or two, the government and Fed’s actions and policies, and economic and financial-market developments have continued to exacerbate the circumstance, such that there is significant chance of the early stages of the hyperinflation breaking in the months ahead. Key to the near-term timing remains a sharp break in the exchange rate value of the U.S. dollar, with the rest of the world effectively moving to dump the U.S. currency and dollar-denominated paper assets.

Williams Fails to Understand

1. Debt-deflation
2. The role of credit vs. money
3. Flight to cash
4. The significance of trillions of dollars in excess reserves just sitting there because banks are undercapitalized and there are to few credit-worthy borrowers
5. How little power the Fed has in controlling the demand for credit (and thus inflation)
6. How international trade works

Breathtaking Ignorance



That is a heck of a lot of things to not understand, but let's focus on one critical error namely Williams' statement "the rest of the world effectively moving to dump the U.S. currency and dollar-denominated paper assets".



I have commented on the invalid nature of such statements at least a dozen times. Here is one from a week ago in Michael Pettis: Long-Term Outlook for China, Europe, and the World; 12 Global Predictions

Via email, Michael Pettis at China Financial Markets shared his outlook for China, Europe, and the world. The overall outlook is not pretty, and includes a breakup of the Eurozone, a major slowdown for China, and a smack-down of the much beloved BRICs.



Pettis Writes ...



August is supposed to be a slow month, but of course this August has been hectic, and a lot crueler than April ever was. The US downgrade set off a storm of market volatility, along with bizarre concern in the US about whether or not China will stop buying US debt and the economic consequence if it does, and equally bizarre bluster within China about their refraining from buying more debt until the US reforms the economy and brings down debt levels.



What both sides seem to have in common is an almost breathtaking ignorance of the global balance of payment mechanisms. China cannot stop buying US debt until it engineers a major adjustment within its economy, which it is reluctant to do. Until it does, any move by the US to cut down its borrowing and spending will trigger a drop in global demand which will cause either US unemployment to rise, if the US ignores trade issues, or will cause Chinese unemployment to rise, if the US moves to counteract Chinese currency intervention.

Emphasis in red added.



Just the Math Ma'am



What Pettis states, and I have reiterated at least a dozens time is that as long as the US runs a trade deficit, US treasuries will have a bid.



This is not speculation, the statement is a near mathematical certainty. Moreover, the US Would Welcome China Not Buying US Treasuries! exactly the opposite of what hyperinflationists would have you believe.



Please read the link for a detailed explanation.



Yield Curve as of 2011-08-28



As the silly calls for near-term hyperinflation mount, I point out a chart of the yield curve.







click on chart for sharper image



Does that look like hyperinflation or does it look like deflation?



Back to the Real World



In the real world, Doug Short comments on Real GDP Per Capita, Year-over-Year Change, and the Next Recession

The next chart shows the YoY change in real GDP from the earliest quarterly data in 1947. I've again highlighted recessions. The red dots show the YoY real GDP for the quarter in which the recession began. The blue dot shows the latest YoY real GDP. Note: Unlike the previous chart, this one does not include a per-capita adjustment.







As the chart illustrates, the latest YoY real GDP, at 1.5%, is below the level at the onset of all the recessions since the first quarterly GDP was calculated — with one exception: The six-month recession in 1980 started in a quarter with lower YoY GDP (1.4% versus today's 1.5%). And only on one occasion (Q1 2007) has YoY GDP dropped below 1.5% without a recession starting in same quarter. In that case the recession began three quarters later in December 2007.



In his 2011 Jackson Hole speech, Chairman Bernanke observed that "growth in the second half looks likely to improve." Our look at YoY GDP percent change suggests that we must indeed see stronger second half growth to avoid the recession that now appears to be a high-probability risk. If Q3 real GDP shows a continuation of the current trend, the NBER will likely pick a month in Q2 as the beginning of a new recession.

Unless there is an immediate pickup in GDP, highly doubtful given Hurricane Irene, the NBER will backdate the recession to the second quarter, just as Tim Wallace stated.



Some analysts will blame Irene. If so, it will be just another "bullshill" excuse by analysts to avoid admitting they blew it. Bernanke may try the same ploy. If so, it will be an attempt to buy time, hoping for a miracle.



No miracles are on the horizon.



Mike "Mish" Shedlock

http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

International Monetary Research says "Eurozone Break-Up Certain"; I say Embrace the Fact "Banks Cannot Be Saved"

Echoing what I have been saying for years, Christine Lagarde, the new head of the IMF says "Banks Need Urgent Recapitalisation". Unfortunately, much of the rest of what she says is pure nonsense, including the way she wants to achieve that mission.



Please consider European banks set cash test by IMF chief

Christine Lagarde, the IMF’s new chief, set off tremors at the Jackson Hole summit over the weekend with warnings that the global financial system is on very thin ice and vulnerable to the slightest shock.



“We are in a dangerous new phase. The stakes are clear: we risk seeing the fragile recovery derailed, so we must act now,” she said.



“Banks need urgent recapitalisation. If it is not addressed we could easily see the further spread of economic weakness to core countries, even a debilitating liquidity crisis. The most efficient solution would be mandatory substantial recapitalisation,” she said.



Mrs Lagarde issued a thinly-veiled attack on the ECB’s rate rises and Europe’s fiscal austerity drive. “Monetary policy should remain highly accommodative, as the risk of recession outweighs the risk of inflation. Fiscal policy must navigate between the twin perils of losing credibility and undercutting recovery,” she said.



Tim Congdon from International Monetary Research said it is folly to force Europe’s banks to raise money too quickly or crystallize losses abruptly. This will cause a monetary implosion and a repeat of the 2008 disaster.



He said the ECB’s restrictive policies over the last 18 months and the lack of EMU fiscal union have doomed the euro to certain break-up.



“It cannot be saved. Banks will suffer large losses,” he said.

Embrace the Fact "Banks Cannot Be Saved"



This mess cannot be saved. Tim Condgon bemoans the fact. I say, embrace the fact!



Tim Congdon wants to kick the can down the road. Christine Lagarde is clearly angling for more taxpayer bailouts.



Just what the hell does it take for people to realize that throwing more money down the drain cannot solve a damn thing?



Banks are going to take losses. That means bondholders are going to take losses. It is nonsensical to assume anything but that. It is equally nonsensical to suggest there is a way around it. The sooner we embrace the simple facts of the matter, the better off everyone but the bondholders will be.



Attempts to shove more bailouts on the backs of already over-leveraged taxpayers will stunt the recovery for years more to come.



Mike "Mish" Shedlock

http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Intuit: U.S. Small Business Hiring Slows in August, Wages Dip

Intuit says U.S. Small Business Hiring Slows in August, Wages Dip

Hiring by U.S. small businesses slowed in August and employers reduced hours, an independent survey showed on Sunday, suggesting the recent stock market turmoil may have dampened job creation.



Intuit, a payrolls processing company, said small businesses added 35,000 jobs after increasing employment by 40,000 in July.



The survey is based on responses from about 66,000 employers at businesses with fewer than 20 employees that use the Intuit Online Payroll system and covered the period from July 24 to August 23.



"There was plenty of bad news this month and the Intuit small business employment figures show this," said Susan Woodward, the economist who helped to develop the survey. "From this month's numbers, we don't see a new recession, but we don't see a robust recovery either."

Odds are US Already in Recession



I am increasing amused at the number of analysts and forecasters who think the US will avoid a recession. I think it is odds on the US is already in a recession.



Others have "gone out on a limb" forecasting a recession within a year.



Is that going out on a limb? Of course not. Going out on a limb was when Dave Rosenberg forecast a 99% chance of recession several months ago.



I was not that brave. He was and he deserves the credit for it. Most of the recession callers are Johnny-Come-Latelys. What's more amusing are those who see little chance of it at all.



Mike "Mish" Shedlock

http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

BẠN VĂN - VIẾT THEO LỐI "KHẨU VĂN"

 Ngô Minh

Nhà xuất bản Trẻ vừa ấn hành tập chân dung văn nghệ sĩ viết theo lối văn chương độc đáo của nhà văn Nguyễn Quang Lập có tựa là Bạn văn. Cuốn sách dày 456 trang gồm 74 mục mà Nguyễn Quang Lập viết trong hai ba năm nay. Sách phác thảo gần 100 chân dung văn nghệ sĩ quen biết của nhà văn , có người đã mất, có người đang sống và viết trên khắp cả nước. Đây là những bài đã được in trên báo Tuần San Thanh niên, chuyên mục Giai thoại . Sau đó in  trên blog Quê choa của Bọ Lập trong chuyên mục Bạn văn.  Blog Quê choa của Nguyễn Quang Lập là một trong ít blog nóng nhất trên thế giới mạng hiện nay. Chỉ mới 3 năm, từ 2009 đến nay, riêng trong mạng wordpress, đã có gần 12 triệu lượt người truy cập của 160 quốc gia trên thế giới. Một trong entries của BlogQuêchoa lôi cuốn công chúng mạng nhất là chân dung văn nghệ sĩ, tức bạn văn. Lối văn chương này Nguyễn Quang Lập gọi là “khẩu văn”, tức là văn nói, một phong cách sáng tạo mới của Lập, rất  phù hợp với cuộc sống nghe nhìn nhiều hơn đọc hiện nay. Đây là cuốn sách thứ hai Lập đến với bạn đọc theo lối văn này. Cuốn trước là Ký ức vụn rất được độc giả chào đón.

Trong Bạn văn có chân dung  người nổi tiếng và người không mấy nổi tiếng , nhưng tất cả đều được vẽ bởi những nét phác thảo hóm hỉnh, sâu sắc mà đậm chất  dân gian nên rất nổi bật. Có cả những câu chửi thề, nói tục. Lập viết tục nhưng không tục, vì đó là “một thứ mắm muối dư vị rất riêng, được Bọ Lập gia giảm có liều lượng vừa đủ  làm cho câu chuyện mặn mòi , làm đậm đà cho nhân vật được nói đến “ ( Lời thưa đầu sách của Phạm Xuân Nguyên). Ví như tính cách mẹ Đốp rất quyết liệt của nữ nghệ sĩ xinh đẹp, chị MYZ trong bài Người đẹp: ”...Một đạo diễn từ Hà Nội vào làm vở, thấy chị thì thích lắm , làm bộ quan trọng , gọi chị ra riêng, nói anh muốn giao vở này cho em, có thích không , chị nói em thích lắm. Ông này nói tối nay đi ăn tối với anh nhé, chị cười  nói ăn tối xong rồi sao nữa anh, ông này cười cười, nói em còn hỏi anh câu đó. Chị nói thôi, để em tụt quần  cho anh chơi ngay bây giờ, ăn uống làm gì cho mất thời giờ. Nói xong thì tụt quần liền. Ông đạo diễn vội vàng quay mặt, bỏ đi liền. Từ đó không dám ho he gì nữa.”

  Văn nghệ sĩ là những người lắm tài, nhiều tật, Nguyễn Quang Lập không hề né tránh cái “tật” đó mà viết về nó vừa ngộ nghĩnh, vừa sắc bén, cười ra nước mắt. Mỗi chân dung chỉ ba bốn trang sách khổ 13 x 20 cm, mà người nào ra người nấy, không lẫn và rất dễ đọc, vì ngắn. Trong Bạn văn  có rất nhiều cái tên cứ nhắc đến là muốn mở sách đọc ngay như Trần Dần, Xuân Diệu, Nguyễn Minh Châu, Hữu Thỉnh, Xuân Sách, Phan Tứ, Hoàng Phủ Ngọc Tường, Lâm Thị Mỹ Dạ, Nguyễn Trọng Tạo, Phùng Quán, Thạch Quỳ, Hoàng Ngọc Hiến , Trần Vàng Sao, Đỗ Trung Quân. Hồng Ánh, Trọng Đài, Trần Đăng Khoa v.v..

  Mỗi người một nét nhấn, rất ngắn, rất hài hước, mà đọc là nhớ như khảm vào tâm trí. Nhà văn Nguyễn Minh Châu luôn thu mình lại , khi đi hội thảo thì :”Vào cuộc người ta nói đông nói tây, anh cứ ngồi khóm róm, nơm nớp sợ người ta gọi đến tên mình, y chang cậu học trò không thuộc bài. Anh nói ông ạ, trên đời này tôi hãi nhất là người ta bắt tôi đi nói chuyện...”.  Còn nhà thơ Lâm Thị Mỹ Dạ  xinh đẹp, hay thương  người và cả tin, khi đi sáng tác  ở Nha Trang, có ông nhà văn đeo lấy tán. Dạ không chịu. Thế là “ ông này giả đò đi thẳng ra biển, nói Dạ không yêu anh thì anh chết đây, rồi cứ thế lội ào ào. Chị hoảng quá, hai tay vẫy vẫy như khoát nước, cuống quýt hét ầm lên , nói yêu yêu vô đi vô đi, yêu yêu vô đi vô đi . Viết về tài đọc sách của nhà phê bình văn học Phạm Xuân Nguyên, Bọ Lập viết :” nó đọc nhanh kinh hoàng...Đọc đâu nhớ đấy, nhớ rất kỹ, rất chi tiết thế mới phục. Cùng một cuốn sách,  mình nhằn mất cả tuần, nó chỉ xơi vài giờ là xong, thế mà động đến chi tiết nào mình đều phải hỏi nó”. Còn nhà văn Nguyễn Khắc Phê thì  “ Đi đâu có khát nước cháy cổ anh cũng cố chạy về nhà  uống nước chứ chẳng chịu mất cho quán nước một xu, còn bảo vào quán uống chén trà thì anh cười lắc đầu , nói trà ở nhà mình cũng có, vô đó mần chi...”.v.v..

 Nguyễn Quang Lập quan sát rất sắc sảo, chỉ một nốt ruồi dưới cằm của ông Tường ( nhà văn Hoàng Phủ Ngọc Tường) cũng biểu hiện khác nhau tùy theo tình cảm  của nhà văn. “Đêm đó tại Đại học Sư phạm Huế, hàng ngàn  sinh viên kín đặc hội trường lớn đón anh Sơn ( Trịnh Công Sơn). Hiếm khi nào thấy anh Tường xúc động, hồi hộp đến thế, cái nốt ruồi to dưới cằm anh giật giật liên hồi”. Mọi người ngưỡng mộ đến thế, nhưng đến khi nhạc sĩ Trịnh Công Sơn  lên sân khấu chỉ nói vài câu và hát đúng một bài Em là hoa hồng nhỏ, rồi xuống, làm Hoàng Phủ lại không vừa lòng, “ mắt anh Tường thoáng buồn, cái nốt ruồi đứng im phăng phắc” ( Chuyện nhỏ hai người bạn)

  Viết chân dung  hài hước, ngắn thế, nhưng mỗi người Nguyễn Quang Lập cũng lẩy ra được những dấu lặng của  cuộc đời rất xúc động . Giữa thời khăn khó cơm áo, nhà thơ Thạch Quỳ, ông đồ gàn xứ Nghệ thì :”...Hồi này xứ Nghệ có phong trào nuôi hươu sao, một con hươu cái đến mấy chục triệu. Anh khoác vai chị ( chị Nhã, vợ Thạch Quỳ) hôn đánh chụt , nói em có biết anh mơ gì không , anh mơ sáng mai ngủ dậy , bên anh không phải là em mà là một con hươu sao... Chị  không cười, nước mắt rân rấn. Anh cười khấc khấc khấc, chẳng phải cười, nghe như anh cố khạc ra  mấy cục đắng ngắt.”.

  Viết về “khẩu văn” của Nguyễn Quang Lập, nhà văn Bảo Ninh cho rằng :” Anh viết dường như rất dễ, nhưng sự dễ ấy trái ngược hoàn toàn với dễ dãi. Đố anh dễ dãi nào viết được như thế....Viết được như thế thật sướng, nhưng muốn sướng được như vậy phải đổi cả một đời trần ai, nào ai dám đổi “. Bảo Ninh nói  chí lý. Nhưng tôi lại  muốn nghĩ thêm. Bọ Lập viết dễ ,viết nhanh vì đã phát kiến ra được lối văn “khẩu ngữ” gần gũi với đông đảo người đọc. Chỉ có lối văn này mới tạo ra được phong cách hài hước, buồn cười mà cuốn hút người đọc.

Greece 1-Yr Rate 60%; Finland Retains Collateral Demand; Multiple Veto Points; ECB "Litmus Test" Coming Up; Germany Accuses ECB of Treaty Violations

Once again the bond markets have spoken, and once again the message is the same: default. Greek two-year bonds are near 44%, having touched as high as 46%. The interest rate on 1-year Greek government debt is a stunning 59.8%.



Greek 1-Year Government Bonds







Greek 2-Year Government Bonds







44% a year, for two years or whopping 60% for one year, unless of course there is a default.



Not only does the bond market say Greece will default, but the implied haircuts are huge given those interest rates.



Greece Not Saved



Supposedly "Greece was Saved" on that blue circle when yet another bailout (throwing more good money after bad) was approved.



The deal unraveled for numerous reasons but demands by Finland for collateral are at or near the top of the list. Austria, Slovakia, and the Netherlands now want collateral as well.



Under great pressure from Germany, the EU, and IMF, Finland allegedly dropped those demands. It was a lie. Finland did not drop demands for collateral, and that shows you the effect of multiple veto points where such decisions must be unanimous or they fall apart.



17 Veto Points



Please consider A Small Country — Finland — Casts Doubt on Aid for Greece

Finland is just one of 17 euro zone countries whose parliamentary approval is needed for the expanded bailout fund and whose domestic politics could upset the process. The case of Finland points to a bigger governance problem in Europe, said James Savage, a professor at the University of Virginia who has published a book on European monetary union.



“You have all these multiple veto points, so they can’t come to a reasonable conclusion, at least not easily,” Mr. Savage said. “You have increasingly less efficient decisions that are being made.”



Officials from European Finance Ministries spent much of Friday in long- distance negotiations about the collateral issue but did not reach an agreement. Conflicting reports about the negotiations have fed market confusion. The news media in Germany and other countries reported Friday that Finland had dropped its demands, but the reports were swiftly denied by Finnish officials.



The climate created by the collateral dispute could make it more difficult for the European Central Bank to continue to defend Italy and Spain in bond markets and contain their borrowing costs. This month the E.C.B. has spent €36 billion, or $52 billion, intervening in debt markets in an effort, so far successful, to cap bond yields for the two countries.



The E.C.B.’s task could prove more difficult when trading volume picks up, especially since both Spain and Italy are scheduled to try to sell debt this week. “A litmus test for the effectiveness of the E.C.B.’s bond-buying program is in the cards,” Rainer Guntermann, an analyst at Commerzbank, wrote in a note.



“We have to listen to the people of Finland,” said a government official, who requested anonymity because of the sensitivity of the issue. “Collateral is an absolute condition for Finland to be involved.”



The collateral dispute is not the only threat to the bailout package. The plan that leaders worked out in July also calls for banks and other investors to swap some of their existing holdings for new bonds that would be worth less but carry guarantees. The plan is designed to cut Greek debt by €37 billion.



But on Friday, in what was probably a tactical move to put pressure on bond holders to accept the deal, Greece said it would back out of the debt relief plan unless 90 percent of investors agreed, Reuters reported.



“Greece should be allowed to fail,” Robert J. Aumann, who has a Nobel in economics, said at a recent conference in Lindau, Germany, according to a text of his remarks. “They should repay the debts they feel able to pay and not pay the others.”

Greece Has Failed



Nobel prize winner Aumann says “Greece should be allowed to fail".



Not quite.



Greece failed long ago. It is only stubborn idiots at the ECB, EU, IMF, and leaders of various countries who insist otherwise.



They insist otherwise to protect their banks. Yet, by throwing more money into the pot that will now clearly be defaulted on, they have made matters far worse.



ECB "Litmus Test" Coming Up



Now that Finland wants collateral for Greek loans, it will do the same if Spain or Portugal needs more loans. Moreover, I keep wondering when the citizens of Spain, Portugal, and Ireland have had enough, given the success of Iceland in telling the ECB, EU and IMF to go to hell.



Iceland is recovering. The PIIGS are not.



German President says ECB Bond Purchases "Legally and Politically Questionable"



How much more Italian bonds can the ECB buy before it runs out of cash, willpower, or completely drains the EFSF €440bn pool of money?



While pondering the above question please note that German President, Christian Wulff, leader of the Christian Democratic Union, says that ECB bond purchases are "legally and politically questionable".



The Telegraph reports on the accusation by Wulff in Germany fires cannon shot across Europe's bows

In a cannon shot across Europe’s bows, he warned that Germany is reaching bailout exhaustion and cannot allow its own democracy to be undermined by EU mayhem.



“I regard the huge buy-up of bonds of individual states by the ECB as legally and politically questionable. Article 123 of the Treaty on the EU’s workings prohibits the ECB from directly purchasing debt instruments, in order to safeguard the central bank’s independence,” he said.



Mr Wulff said the ECB had gone “way beyond the bounds of their mandate” by purchasing €110bn (£96.6bn) of bonds, echoing widespread concerns in Germany that ECB intervention in the Italian and Spanish bond markets this month mark a dangerous escalation.



The blistering attack follows equally harsh words by the Bundesbank in its monthly report. The bank slammed the ECB’s bond purchases and also warned that the EU’s broader bail-out machinery violates EU treaties and lacks “democratic legitimacy”.



The combined attacks come just two weeks before the German constitutional court rules on the legality of the various bailout policies. The verdict is expected on September 7.



The tone of language from two of Germany’s most respected institutions suggests that both markets and Europe’s political establishment have been complacent in assuming that the court would rubberstamp the EU summit deals in Brussels.



Nobel laureate Joe Stiglitz told the forum that the euro is likely to fall apart unless Germany accepts some form of fiscal union. “More austerity for Greece and Spain is not the answer. Medieval blood-letting will kill the patient, and democracies won’t put up with this kind of medicine.”



Mr Wulff rebuked Chancelor Merkel, saying political leaders should not break their holidays every time there is trouble in the markets. “They have to stop reacting frantically to every fall on the stock markets. They mustn’t allow themselves to be led around the nose by banks, rating agencies or the erratic media,” he said.



“This strikes at the very core of our democracies. Decisions have to be made in parliament in a liberal democracy. That is where legitimacy lies.”

Kiss a Larger EFSF Goodbye

1. Kiss a larger EFSF goodbye unless 17 nations all agree to raise the pool to a collective to the proposed €2.2 trillion from the current €440 billion pool.
2. Kiss a larger EFSF goodbye unless Greece offers hard collateral
3. Kiss a larger EFSF goodbye unless German courts rubberstamp the EU summit deals
4. Kiss a larger EFSF goodbye unless 90 percent of investors agree to the deal

In other words, kiss a larger EFSF goodbye, expect a test of the ECB's Italian, Spanish, and Portuguese bond purchasing power, and expect a German court test that in-and-of-itself would settle this matter once and for all.



Even if the German courts approve the deal, there are still more than 17 points of failure, counting investors.



One way or another Greece will default. The sooner the better, actually.



Mike "Mish" Shedlock

http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List