from the hip

You really have to admire Times. Being stubborn is, after all, at least partly a virtue. And being willing to take a risk is also, up to a point, a virtue.

Times is insisting that you have to pay to read the paper online. They must have known they were taking a huge risk when they started the experiment. I mean, all those who have tried that so far, as we all know, have lost on it. They succeeded only in shredding most of their loyal readers. People are willing to pay for content online. But not for news. There’s too much available. But Times still think they should try it. That’s risk taking for you!

And they still persist. That’s enormously admirable! I check in every once in a while, as it was a newspaper I used to read before the experiment, but their experiments is still running. That’s being stubborn! Every day, every week, every month they are loosing readers. And they still march on.

Well. We see it all the time; newspapers and magazines that have to close shop. Most go under because they are unable to compete in the new, hard, environment with online news from everywhere. And some, as Times, as it were, commits suicide.

So there you go. Being stubborn is OK, up to a point. Being willing to take a risk is OK too, again up to a point. But the two in combination is bad. Seriously bad.

Unless, that is, you happen to be The Independent, Guardian or Daily Telegraph. Then it is excellent. The more customers Times decides to get rid of, the merrier.

Most European countries have experiences with totalitarian regulation. Censorship was implemented during World War Two in Germany and all German occupied territories by the Nazis. Italy had the same under Mussolini. And in Eastern Europe it was in place until the Berlin wall fell and the Soviet dominated communist states were smashed and censorship was finally abandoned.

Today we witness a new kind of totalitarianism. This time implemented by men unknown in the corporate offices of the American corporations Google and Apple. Behind closed doors executives of these two corporations have decided that American moral standards must be imposed all over the globe. Rarely, if ever, have we witnessed more self-righteous and cultural imperialist corporate decisions than these.

Apple has decided to block what it considers “objectionable content” from being shown on iPhone. And “objectionable content” here refers to nudity. Completely ignoring the fact that moral standards differ considerably from country to country in the world, it is, of course, American moral standards that are the ones being implemented – standards which most Europeans consider completely silly. No nude legs, breasts, bodies, or – heaven forbid – female nipples can be shown on an iPhone. Despite the fact that European newspapers and magazines – Norwegian, Swedish, Danish, German, French, and so on and so forth – bring such photos all the time and nobody raises even an eyebrow.

And Google has actually done the same thing for a long time without being explicit about it. If you look at some of the posts in this blog that contains beautiful pictures of women – perhaps even showing their nipples – you will notice that the content of the Google ads disappear (as a matter of fact, all images shown on this site have also been published in European newspapers and magazines). It is the same on millions of websites all over the world. And what defines what is appropriate and what is not? The views predominant in the country where the website is located? The views common in the country of the person looking at the blog or magazine article? No! You guessed it! The American puritan moral standards!

I don’t know why corporations feel they ought to use technology this way. And I certainly don’t know how to stop it. I do know that I am appalled by it. And I hope the EU or some international organization will put an end to corporate censorship and cultural imperialism. We don’t need it. We don’t want it.

PS: See also:

• The excellent article about this in New York Times: In Germany, a Nude IS No Big Deal, Except on an iPhone, in today’s paper, page B4.
• Gizmodo.com: It is time to declare war against Apple’s censorship
• Apple discussion forum about “Is censorship really needed” – which has strangely been closed for comments
• Cult of Mac: Apple censorship reaches new levels of stupidity
• Seth Finkelstein: Google Censorship – how it works
• See the censored version of “Nudity in Art” at YouTube

Is this really the welfare state people wanted in Denmark? Less than 50% of the people in Denmark are now working to provide for the other half – more than 50% now get their income from the Danish state, reposts Danish newspaper Politiken today.

To me this sounds pretty bad. It raises a lot of questions, even if – as is the case with Denmark – everybody are provided for economically. To me, participation in the labor market is an important thing – that 50% is outside the labor market does not sound so good.

Also – how fair is this? How does it feel for the half that provides the goods? Not my kind of welfare state!

Danish newspaper Politiken reports that pre-pubescent Danish girls develop breasts a year earlier than previously. And this seems not to be as a result of their own hormones, according to a new survey from the Rigshospitalet’s Department of Growth and Reproduction. Politiken writes:

“We believe this is a result of environmental factors – hormone disrupting substances that have a strength to develop breasts despite the fact that the girls do not enter puberty. These substances are everywhere – in cosmetics, foodstuffs, paint – everywhere,” says Sr. Lise Aksglæde one of the authors of the report, naming parabenes and phthalates as two of the substances under suspicion.

More than 2,000 Copenhagen girls between five and a half and 20 years of age have taken part in the puberty survey. Half were surveyed in 1992 and 1993 and the rest between 2006 and 2008. Results have been published in the American scientific journal Pediatrics.

Denmark has been hit very hard by the international recession. Private consumption has dropped rapidly. Car sales are hit especially hard. The Danish newspaper Politiken writes:

Car sales are generally a good indicator of whether people are hanging on to their money; In the fourth quarter of 2008 car sales dropped no less than 23.8 percent. Other goods dropped 1.1 percent.
The new figures come the day after new unemployment figures showed an increase for the fourth month in a row. January jobless figures showed an increase of 5,000 with unemployment now at 2.3 percent.

The Danish GDP for the year 2008 as a whole is negative. And, as yet, there a few signs that the drop in the Danish economy is declining.

The top fell off for Russian ice skater Ekaterina Rubleva as she danced with Ivan Shefer on the ice. The russian figure skater was being twirled around by her partner, Ivan Shefer, when her costume started to slip.

The 23-year-old world class skater is extremely professional, and kept smiling, but with the next move, which required her partner to hold her hand above her head, the inevitable happened. And here is the result:

PS: You can see more beautiful pictures of world class athletes in this article from Bild!

First we learned that the recession was deeper in the US than had previously been told. Now we learn the same about the UK. It is somewhat strange that the bias of these numbers seem to consistently be in the same direction?

Anyway, here is what Times writes about this issue today:

OFFICIAL figures this week will confirm that the economy has been sliding into recession for months and could show that the downturn is deeper and started earlier than first thought.

Revised figures for gross domestic product (GDP) in the third quarter are set to show a fall of at least 0.5%. Several analysts believe that subsequent information, particularly on the dire performance of manufacturing, will see a sharper quarterly fall of 0.6%.

Whitehall officials are also braced for a revision of earlier data, which could change the timing of the recession.

Economists are getting gloomier about the outlook. The Centre for Economics and Business Research, a consultancy, predicts that Britain will contract by 3% in 2009 and a further 0.7% in 2010, implying a long, deep recession.

Capital Economics, another consultancy, now predicts a fall of 2.5% in GDP next year, with a further drop of 1% during 2010.

This compares with the Treasury’s prediction of a decline in GDP of between 0.7% and 1.25% next year, followed by a recovery in 2010, when it expects to see the economy grow by between 1.5% and 2%.

As you can see, the new figures, as well as the updated outlooks, point in the direction of a recession that is both deeper and of longer duration than has so far been indicated by official sources.

The Danish newspaper Politiken writes that Denmark now is the most expensive country in the EU as far as consumer prices for goods and services is concerned! They write:

Statistics Denmark 2007 figures show Denmark to have the highest consumer prices for goods and services in the 27 European Union countries – 38 percent above the EU average.

Number two on the list is Ireland with 25 percent above the average. The lowest consumer prices among the old EU countries are to be found in Greece and Portugal where prices are 11-15 percent below the average.

The lowest prices are to be found in the new EU countries, with Bulgaria coming in at 53 percent below the EU average.

Denmark is also the most expensive country in the EU for foodstuffs and non-alcoholic beverages where Danish price levels are 43 percent above the EU average.

I am sure those numbers are correct. The only country in Europe more expensive than Denmark is Norway, which is not a member of the EU and thus not included in these statistics.

In a previous post I pointed out that the Citigroup bailout, viewed in light of the previous US bailouts, seemed to indicate a clear lack of principle and consistency in the US bailouts that we have seen so far. Every time there is a problem, US government comes running to fill coffers that needs filling or shore up towers about to topple, but the underlying principles with regard to how to spend taxpayers money seem to be lacking. As well, there is no consistency in the methods employed.

In one instance, a bank is more or less given to another bank (Lehman), with a promise of public money if the deal is bad. In another case, the government hands out tax payers’ money, but takes a dominant position, so that the tax payers at least get stock in return (AIG). In a third instance, a badly performing bank (in reality, its stockholders) is given a huge cash gift, again from the taxpayers, but with little to show for it in terms of stocks (Citigroup).

Now the new head of the Congressional panel monitoring the bailouts, expresses concerns about the bailouts as well. Lacking strategy is the major concern. New York Times writes:

The head of a new Congressional panel set up to monitor the gigantic federal bailout says the government still does not seem to have a coherent strategy for easing the financial crisis, despite the billions it has already spent in that effort.

Elizabeth Warren, the chairwoman of the oversight panel, said in an interview Monday that the government instead seemed to be lurching from one tactic to the next without clarifying how each step fits into an overall plan.

“You can’t just say, ‘Credit isn’t moving through the system,’ ” she said in her first public comments since being named to the panel. “You have to ask why.”

It is surprising that more critical questions have not been raised so far. There ought to be a set of principles guiding the handing over of public money to the private sector. Those principles ought to say something about when to do it, what the government should get in return, how assets acquired this way is to be handled, and so forth. As well, there must be consistency from case to case. If these two elements are lacking, government bailouts will sooner or later be challenged, and many will view then as illegitimate. Handing over public funds, giving some companies competitive advantages over others, and so forth, can easily be viewed as highly unfair and inequitable – both by voters and tax payers, as well as by competitors in business – unless the underlying principles are widely accepted and the actions taken are  viewed as being according to and consistent with the principles.

As well, unless the US government figures it has unlimited funds – which is not a reasonable assumption given its staggering debt – there ought to be a larger plan, a strategy, behind the interventions. Even the government may not be able to fill all the holes that needs filling in the next year or two.

So far, the bailouts have some pretty serious shortcomings from these points of view. In my opinion, that is.

I was stunned by the Citigroup bailout. That is, not by the fact that the US government chose to do it, that was as I expected, even thought I thought and still think it was wrong (see my earlier post on this). But what stunned me was the terms of the bailout. Then, later, I have been stunned by the total lack of critical discussions of the terms of the bailout deal. That, more than anything about the Citigroup story, still amazes me.

My understanding is that the government has agreed to pump 20 billion US dollars into a company that that had a market cap of less than $21b on the Friday before the deal, and then only getting a single digit share of its stocks? That really has to be the worst deal for the taxpayers ever, and a clean gift of tax money to Citigroup’s shareholders? I mean, they could have bought a larger share cheaper on the market? At least 5 times bigger?

Second, for guaranteeing $250 billion of risky assets the government acquired the right to buy C stocks – that is, warranties – for 280 mill dollars at a price of USD 10.64. But the stock price was 4 dollars. Who else would want to buy warranties, linked, as in this case, with the risks associated with 250 billion of bad loans, at a strike price 2.5 times the price of the stocks in the free market? That, to me, seems simply wild. It really means the bad loan insurance if for free, and that the government has acquired some badly priced warranties.

Thirdly, by insuring the bad debt of Citigroup, the government also has created a competitive situation where C can now borrow money at lower rates than its competitors. That is, in competitive terms, the better performing banks have been twice punished – first by not getting the same gift and then by having to compete unfavorably by a bank they outperform every day of the week.

All this seems to me to indicate a level of unprincipled thinking by the government and its negotiators almost beyond my grasp. I totally understand Citigroup. They mucked it up, but then made a good save. Well done boys, I say to them! You rock! But the government, they are harder to understand. Their solution is bad and does not follow the pattern of earlier bailouts. And clearly, this also is a type of operation that can’t be repeated over and over, which means others can’t expect similar treatment in the future. So, we can’t expect this to be a new type solution that will be followed consistently in future cases.

So – lack of principled thinking and consistency in the government’s policies (compare it to the AIG bailout), giving tax money to shareholders, creating a competitive advantage for a bank that frankly has performed among the worst in its class, and giving one bank among the thousands of US banks something others do not get.

Spending tens of billions of taxpayer money and seemingly giving it away, and without any tracy of consistency in the behavior underlying the actions nor any traces or principled thinking. That is a tall order. And yet – there is hardly one – I repeat ONE – critical voice in the media. Not in Wall Street Journal, not in New York Times, not in Washington Post. So what is happening? All they all scared stiff by the recession? They too?

PS (12/04/08): New York Times today  wrote an article entitled Vikram Pandit Scores a Great Deal for Citigroup. They write:

as further details emerge on Citi’s government bailout, Mr. Pandit seems to have pulled off a truly fantastic deal.

Some details still haven’t been disclosed, and some haven’t even been entirely nailed down. So piecing together what is going on is a bit like solving a Rubik’s cube with some squares missing, Breakingviews notes. But judging from what has been made public, Mr. Pandit has shuffled off to Uncle Sam much of the downside in Citigroup’s $306 billion portfolio of riskier assets for what looks to be a low insurance premium, according to the publication.

See the story at The Daily Beast! It is pretty outrageous, actually. A commenter on the NYT article writes:

Inside sources have the value of Citi’s $306 billion portfolio at closer to $230 billion. That means taxpayers are locked in for a transfer of wealth of (306-230) x 90% (Citi takes 10% haircut – $29 (Citi takes first $29bn) = $42.3 billion. Taxpayers because of the incestuous Goldman Sachs relationship between Paulson and Rubin have forked over $42.3bn!!! to Citi shareholders. This is highway robbery and should be investigated at the highest authorities and be ultimately rescinded.

See also: Time Magazine: Why Government Intervention Won’t Last