from the hip

It goes on and on – the financial crisis. Now Bank of England slashes interest rates to a 53-year low. The Independent writes:

Interest rates were today slashed to a 53-year low to fight off recession – but fears were growing that hard-pressed homeowners would fail to reap the benefit.

The shock 1.5 per cent cut by the Bank of England’s Monetary Policy Committee (MPC) is the biggest move since March 1981 and brings rates to 3 per cent – last seen in 1955.

Stock markets were stunned by the size of the cut and experts predicted rates could reach an all-time low of 1.5 per cent by mid-2009 as the Bank desperately bids to ward off a prolonged slump.

Also, the European Central Bank cut interest rates by 50 basis points today and signaled another reduction was possible later this year. In Germany the no. 2 bank has decided to tap into the government rescue plan, and the government will propose tax breaks on car purchases to stimulate spending!

The bottom still seems distant.

See also:

• New York Times: European Banks Reduce Rates, Some Sharply
• Guardian: Shock as Bank of England slashes rates to 3%
• New York Times: Bleak Reports Keep Markets in Free Fall
• Guardian: Wall Street and London shares plunge

While the economic downswing is still making itself felt in the US, it is now also hitting several European countries hard. And inflation is soaring, and hit a record high of 4.1 percent last month.

“There’s no obvious trigger for strong economic growth in Europe until the end of 2009,” says David Owen, chief European economist at Dresdner Kleinwort in London. “Massive [financial] imbalances need to be worked out, and the corporate sectors in many countries remain in a substantial deficit.”

Consumer confidence for the euro area has fallen to negative 29.7, the lowest it has been since 1993. And the news about the plunge in factory orders in Germany, led to the following comment, reported in the New York Times:

“It now looks likely that the euro zone will be the first major economy to fall into recession,” Jonathan Loynes, the chief European economist for Capital Economics, wrote after the report of sagging orders in Germany.

Great Britain

Royal Bank of Scotland, Britain’s second-largest bank, recently posted its first loss in 40 years after taking a £5.9bn hit from the credit crunch. And Barclays, the third-biggest bank, took a fresh £2.8bn write-down. Also, the price of houses are dropping rapidly, according to Guardian

the Halifax said house prices last month were 11% down on a year earlier – the first double-digit decline since its monthly healthcheck of the market was first published 25 years ago.

House prices back to 2006 and still falling, says Times. And new housing orders are down 33%. And, of course, home repossessions surge.

Business groups and City analysts warned that deep and rapid cuts in the cost of borrowing would be needed next year to pull Britain out of its first recession in more than 15 years. House prices are falling more rapidly than they were in the property crash of the late 1980s and early 1990s

It would seem a possible recovery in Britain will not be aided by increased consumer spending in the short term!

Recession in Germany?

Spiegel online writes that the German economy may have shrunk in the second quarter, according to early reports, and that the outlook for industrial production isn’t lively. Germany could slide into recession, and the German economy may have shrunk by around one percent. They also note that:

German factory orders were down by 2.9 percent in June from May, and orders from abroad for German goods plunged by 5.1 percent. Production at German factories rose by 0.2 percent in June — less than expected

Spain in deep trouble

Portugal, Italy, Greece, and Spain all face severe challenges. In Spain, the imploding domestic housing market has pushed the unemployment rate to 10.7 percent. The number of bankruptcies in the building sector is exploding, and one third of the job losses stems from the construction sector. As well, the housing market is stalling. The inflation is about 5 per cent.

The US

The credit cruch is still being felt, and so is the reversal of the wealth effect and high oil prices. In addition to bad news from the banking sector, Fannie Mae, Freddie Mac, Indy Mac, and so, in the latest sign of the deepening troubles, G.M. recently reported a second-quarter loss of $15.5 billionfollowing a loss of $8.7 billion reported earlier by Ford. Car sales are dropping, especially sales of American cars.

Guardian notes that:

The US mortgage finance empire Freddie Mac yesterday predicted the worst housing slump since the Great Depression as it set aside $2.5bn (£1.28bn) to cover credit liabilities caused by delinquent loans and foreclosures.

And in New York Times, Peter S. Goodman recently wrote (August 1) that “More Arrows Seen Pointing to a Recession”.

Overall

Pretty gloomy still. The most positive piece of news is the slight drop in oil prices. But still serious signals of a slowdown of growth and possibly recession both in Europe and the US.

The Austrain Incest Case

Father Confesses to Horrific Crime. He held his daughter prisoner and abused her for decades. In the most spectacular kidnapping and incest case in Austrian history, a man has confessed to having held his daughter hostage for 24 years and siring seven children with her. (Der Spiegel)

Austria Stunned by Case of Imprisoned Woman. With his Mercedes-Benz and his fine clothes, Josef Fritzl looked every inch a property owner, neighbors in this tidy Austrian town said Monday. Even when running errands, they said, he wore a natty jacket, crisp shirt and tie. (New York Times)

The Family Man of Amstetten: Double life of a pillar of Austrian society. How did the perpetrator of one of modern Europe’s most horrific crimes convince his neighbours he was a respectable man? (The Independent)

Josef Fritzl: a shrewd liar and an obsessive tyrant. Casual acquaintances knew Josef Fritzl as a jovial fellow who liked to drink beer and enjoyed a bawdy joke.

But former neighbors say the man accused of imprisoning his daughter and fathering her seven children ran his household like a dictator. Piece by piece, a picture is emerging of a shrewd liar and an obsessive tyrant. (International Herald Tribune/AP)
(more…)

The case about Josef Fritzl, the Austrian that kidnapped his own daughter and kept her in a small underground apartment, behind seven locked doors, for 24 years while he abused her both sexually and in other ways, represents, to me, evil in a pure, undiluted form. Not only bad, evil acts, but systematic, organized evil.

As the full extent of his actions has been revealed – the torment to which he exposed his daughter for almost a quarter of a century, raping her and fathering her seven children in that little cave – I have become more and more perplexed. How can this be? How is such behavior possible in our time and age? How can a man become such a monster? And at a more practical level – how could a thing like this go on in a civilized, well-regulated society for 24 years?

A man claiming to be protecting his family, but obviously also a man who knew this his style of protection was more than a little at odds with socially accepted forms of protection. While his lawyer may be able to see good things in Fitzl, I really do not.

We are starting to learn a little bit about his past. It sheds considerable light on the question of how he became the monster. It offers, possibly, at least the beginnings of a seemingly plausible psychological explanation for his monstrous crimes. The Independent writes:

In an interview, the sister of Fritzl’s wife, Rosemarie, a woman identified as 56-year-old Christine R said that Fritzl had been brought up by a single mother with an explosive temper who resorted to violence to control her child.

“Josef grew up without a father. His mother raised him with her fists,” Mrs R said. “She used to beat him black and blue almost every day. Something must have been broken in him because of that. He was unable to feel any kind of sympathy for other people. He humiliated my sister for most of her life.”

He grew up being systematically subjected to and controlled by violence. But even so, the case still makes me perplex. The reason is that Josef F. at the same time was so much more than a monster, in other settings, with other people. He was evil incarnate, but also a smiling, respected, and somewhat successful businessman who amassed a fortune of 4 million dollars or so.

Over the years, more than 100 people have rented rooms and apartments from him. Seemingly without having much of a clue as to what went on. Apart from one person, that is, who has admitted to knowing about sexual abuse. But he was scared of Josef F. and did not dare to report it to anyone. Also, it has become known that Josef’s brother had a key to the basement.

Lately, after the case has become public, we have also seen a number of old, unsolved crimes resurfacing. An unsolved murder, several unsolved rapes. So far, the ties to Josef F. are speculative. But it would not, I guess, be very surprising if they turned out to be real. According to Der Spiegel, he raped his own daughter in front of her his and her children. So why should anything be a surprise?

So there was Josef F. the beast, and there was Josef F. the family man, and Josef F. the businessman. Possibly Josef F. the murderer and rapist. The multiple faces of Josef F. And the smiling face with the evil behind.

The little we know about his background, so far, may perhaps begin to explain, partly at least, the monster. However, explaining how the monster could coexist, seemingly with easy, with the other faces of Josef Fritzl, is a bigger challenge.

More about this case:

The Independent: The Making of a Monster

No need to be surprised when a house of horrors turns up on a quiet provincial street

Josef Fritz in the news

New York Times: Austria Stunned by Case of Imprisoned Woman

Painting a portait of Austrian incest suspect Josef Fritzl

Guardian (UK): How many more of our missing are stuck in some underground prison? (Expert view)

‘Every little thing she did, her father would hit her’

Princess Diana is one of the biggest mythical figures of recent times. From the day it became public knowledge that she was dating Charles, Prince of Wales, everything she did or said was major news more or less all over the world.

People loved her. She was royal, she was a kind person, she was engaged in social problems and health problems, and she was beautiful. So, of course, the media loved her as well. Hardly anything or anybody sold stories like Princess Diana. Nothing or nobody could outshine her as a media story seller.

And the paparazzi loved her as well. A picture of Diana, at just the right time and from the right angle, was literally gold. It could be sold all over the world in no time. And so they followed her. Everywhere, always. In huge packs, like hungry wolves chasing for food.

There was a whole industry around Diana. Paparazzi, journalists, newspapers, magazines, radio stations, TV-stations, journals, charities, celebrities – they all wanted her and fed off her immense popularity. Naturally. That’s how the world works in our day and age. And all because people all over the world were interested in her, liked her, sympathized with her, wanted to learn more and more about her.

Any problem she had – in the relationship to Charles, with the emergence of Camilla, with men she met, lovers – also fed into the media madness that was the modern myth of Diana. And made it grow even bigger.

She was a myth. She to some extent became the myth. She was consumed by the myth, in the end. That’s what the jury in London, and the judge, really said.

And now the new inquest about how Princess Diana died is over. It has been huge. Here are some figures highlighting the scale of the Diana inquest:

2,931,300 – estimated number of words spoken in open court during the inquest – almost four times as many as there are in the Bible.

£10 million – the likely combined cost to the taxpayer of the inquest and the preceding Scotland Yard investigation.

20,000 to 66,000 – the number of landmines which could potentially have been cleared for £10 million. (Based on an estimate of between 300 US dollars and 1,000 US dollars per device used by the Mines Advisory Group).

This whole thing reminds me a lot about another powerful myth, that of President John F. Kennedy. That too is a myth still alive and going strong.

As with John F. Kennedy, I suspect Princess Diana will be a mythical figure for a long time to come. It doesn’t really matter what the inquiry concluded. There are still more conspiracy theories to be constructed, I am sure. More elements in the myth to be spun. More articles that will be written, about her, her relationships, what she did, and so on. And more books, more TV-shows, more movies.

Princess Diana is, for good or bad, a powerful modern myth that will be with us for a long, long time to come.

I think.

More stuff about Princess Diana:
An article from The Guardian on the multiple conspiracy theories.

As more and more facts and numbers about the current crisis in the US emerge, I find myself wondering just how deep this recession is and how long it is going to last. A number of people, among them Stiglitz, have indicated that it is deep and severe. But still the question remains: How severe?

This is what The Guardian (UK) writes:

America looks like it is already in recession, one that threatens rapidly to become the biggest slump since the 1920s. The collapse a week ago of the country’s fifth-largest investment bank, Bear Stearns, signalled that the crisis sweeping the world’s credit markets had taken a decisive turn for the worse.

Maybe it is a sign on the depth of the crisis that The Independent (UK) today brings an article entiteled:

USA 2008: The Great Depression

Food stamps are the symbol of poverty in the US. In the era of the credit crunch, a record 28 million Americans are now relying on them to survive – a sure sign the world’s richest country faces economic crisis

.. Forty states are reporting increases in applications for the stamps, actually electronic cards that are filled automatically once a month by the government and are swiped by shoppers at the till, in the 12 months from December 2006. At least six states, including Florida, Arizona and Maryland, have had a 10 per cent increase in the past year.

So, an inreasing number of American families have problems putting food on the table. Meanwhile, in Washington the republican government is concerned about proposing a plan for regulating the financial institutions, and launches a plan many commentators (Wall Street Journal) say is mostly “dead on arrival” (New York Times). And, one might add, a plan that will only, at best, be relevant to the next crisis – the current one is here and regulation is not going to make it disappear.

Wall Street regulation is not going to solve it. Not now.

The price fall in the US continues and accelerates. According to The Independent:

The price of the average home was 11 per cent lower than a year ago, the S&P Case-Shiller index showed yesterday, as repossessed homes flood the market – and economists predict that the price adjustment may belittle more than half over.

…. “It does not look like early 2008 is marking any turnaround in the housing market,,” said David Blitzer, S&P index committee chairman. “Home prices continue to fall, decelerate and reach record lows across the nation. No markets seem to be immune from the housing crisis.”

Other indexes point in the same direction. But actually all these indexes most likely underestimate the problems in the housing market for the moment. The reason for this is that a large number of sellers are holding back. So at the same time the market has slowed down (New York Times):

Sales of new U.S. single-family homes fell to the slowest pace in 13 years

On the other hand, real interest rates are now negative. And the Fed is pumping liquidity into the market. So it’s easy to think that the housing market will pick up relatively soon.

However, I don’t think that’s the case. Given the huge structural imbalance in the housing market and the time it will take to achieve balance, on one hand, and the need the Fed has to also look at factors in the much bigger recession picture on the other hand, they can’t and shouldn’t maintain negative real interest rates for an extended period of time. And smart buyers, I think, know this.

Because the bigger picture is a federal budget out of control, a foreign trade deficit that is monumental, a continued weakening of the dollar as a result of low interest rates, low productivity (see NYT, Feb. 7) growth in the economy (see also OECD), cautious lending by the banks (reacting to the current uncertain situation), and the danger of a substantial imported inflation.

Then add to all this that a negative real interest rate most likely is exactly the opposite of what the American economy needs over the slightly longer term, as cheap capital will lead to decline in productivity.

Taken together, these factors should imply that a negative interest rate – which just is plain stupid but may momentarily be necessary – will and should only be maintained until the financial institutions are over the worst.

More to come!

France’s President Nicolas Sarkozy is an active gentleman. One of his main concerns is to re-establish France as a leading nation in the world. “Gloire”, “Vive la France”, and all of that.

Now he has taken a major step in that direction, by marrying Carla Bruni. With her, France now has the most beautiful First Lady in the world. Not only with her clothes on, but nekkid as well.

This picture (cut be me), presented in the Norwegian newspaper Dagbladet, is to be sold at an auction at Christies i New York on April 10th, along with nude photographies of Christy Turlington, Naomi Campbell and Kate Moss. Some of the most beautiful women in the world. So the First Lady is in good company.

In my humble opinion, no other first lady even comes close to her with their clothes on. And nekkid I don’t think there is even a competition. Not even close, I would think.

To the French, who lovers of good food, excellent wine, art, beauty and the good life, and beautiful women as well, this must a great step forward. Vive la France!

I think.

PS: The owner of the photography, Gert Elfering, does not want to be accused of making money on Carla Bruni’s current posistion as First Lady, and has decided that the money from the sales of this picture will be donated to a charity.

PS2: There is a good article about the interesting life of the model, artist, and First Lady Carla Bruni in todays Independent. Highly recommended!

PS3: The photography of Carla Bruni sold for 91.000 US$, much more than expected!