The Big Picture

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• Open Thread: Gerrymandering Foils Majority
• 10 Wednesday PM Reads
• PIIGS Unemployment Rates
• Safe in a Mattress: Ultimate European Safety Net
• Wednesday AM Reads
• Best Predictor of Financial Crisis: Huge Inflows of Foreign Money

Open Thread: Gerrymandering Foils Majority Posted: 27 Mar 2013 05:00 PM PDT Click for full size graphic   HUGE Bloomberg article on Gerrymandering: “Still, it's rare for one party to win more House seats while securing fewer votes than the other party. The last time it happened before 2012 was in 1996, when Democrats won the nationwide House vote by 43.6 million to 43.4 million as Republicans held their majority and Bill Clinton was re-elected president, according to the House Clerk's office.” Discuss . . .   PART 1 GRAPHIC: Fewer Votes, More Seats for Michigan Republicans PART 2: Republicans Win Congress as Democrats Get Most Votes PART 2 GRAPHIC: Redistricting Delivers North Carolina to Republicans PART 3: California Nonpolitical Districting Ousts Life Incumbents RELATED: Republican Review of 2012 Losses Calls for Many Changes

10 Wednesday PM Reads Posted: 27 Mar 2013 01:30 PM PDT My afternoon train reads: • The Handy-Dandy Investors Crash Loss Calculator (MarketWatch) • Your House Is An Undiversified Bond Investment (The Basis Point) • Companies in Trouble Call More on Bullish Analysts! (Real Time Economics) • Regulators Find British Banks Must Raise $38 Billion (DealBook) but see Fed doves in no rush to scale back asset purchases (MarketWatch) • Why I’m leaving China (CNNMoney) • Blue Sky Thinking: Collecting Solar Energy in Space and Beaming it to Earth (Slate) • Rivkin: In Praise of Sheryl Sandberg (and all women) (ContraCarbon) • After Yahoo Acquires Summly, Is Buying Math The Next Tech Bubble? (npr) • Can the New Cadillac Catch Up to BMW? (WSJ) • T-Mobile to Carry iPhone 5 for $99.99 Starting April 12 (FastCompany) see also T-Mobile Shakes Up Its Service, offers $99 iPhone 5  (NYT) What are you reading?   Dash for cash Source: The Economist

PIIGS Unemployment Rates Posted: 27 Mar 2013 09:10 AM PDT Unemployment rates of the PIIGS Click to enlarge     Since 2007, these respective countries have seen their unemployment rates all skyrocket. Greece and Spain are leading the way, with U/R up more than a 300%. The PIIG states are a dangerous combination of corruption, low wages, and tax avoidance that makes their political situation volatile. Add high unemployment to a middle class that has been pressured by harsh economic conditions, and you have circumstances right for disruption. I am not a believer that Cyprus set the template for other European (read PIIG) deposit grabs, but it is becomes less unthinkable if the situation accelerates to the downside. More on this later . . .     Source: Global Financial Data Ralph M Dillon March 26, 2013 www.globalfinancialdata.com

Safe in a Mattress: Ultimate European Safety Net Posted: 27 Mar 2013 07:23 AM PDT   A Spanish company — Micholochon — has designed the Ultimate European bank crisis safety net. They want you to — literally — put your money in their mattresses:   My Spanish is rusty, but the video makes the why and how pretty clear:     Now! Available in Cyprus!

Wednesday AM Reads Posted: 27 Mar 2013 07:00 AM PDT My morning reads: • A Bear Call on Bullish Analysts (WSJ) • Dow Industrials show declining tax burden as a share of profits (Washington Post) • Buffett's Career in Less Than 1000 Words (The Aleph Blog) see also Berkshire to Pay Nothing to Be Among Top Goldman Sachs Holders (Bloomberg) • Most foreign investment in BRICs isn't foreign at all—it's tycoons using tax havens (Quartz) • European Regulators to Charge Banks Over Derivatives (WSJ) • More choices lead to bigger gambles (Futurity) • Petition seeks to outfit members of House, Senate with NASCAR-style patches (Yahoo News) • Why Fox News is less to blame for polarised politics than you think (The Economist) • Apple’s broken promise: why doesn’t iCloud ‘just work’? (The Verge) • How the Wild West REALLY looked: Gorgeous sepia-tinted pictures show the landscape as it was charted for the very first time (Daily Mail) What are you reading? Post-financial crisis recoveries Source: Chart of the Day

Best Predictor of Financial Crisis: Huge Inflows of Foreign Money Posted: 27 Mar 2013 04:28 AM PDT Source: Spiegel     On Monday, our AM readings had a link to Krugman’s Hot Money Blues. There was lots of pushback against the article, which blames concentration of capital seeking to circumvent taxes and regulation as an underlying cause of nearly all financial crises: “But the truth, hard as it may be for ideologues to accept, is that unrestricted movement of capital is looking more and more like a failed experiment . . . Since 1980, however, the roster has been impressive: Mexico, Brazil, Argentina and Chile in 1982. Sweden and Finland in 1991. Mexico again in 1995. Thailand, Malaysia, Indonesia and Korea in 1998. Argentina again in 2002. And, of course, the more recent run of disasters: Iceland, Ireland, Greece, Portugal, Spain, Italy, Cyprus. What's the common theme in these episodes? Runaway bankers; they played a role in a number of these crises, from Chile to Sweden to Cyprus. Best predictor of crisis is large inflows of foreign money: in all but a couple of the cases I just mentioned, the foundation for crisis was laid by a rush of foreign investors into a country, followed by a sudden rush out.” (edited & emphasis added). Perhaps a better way to express that is a visual depiction of Cyprus’ Debt and Bank deposits, shown above. The outsize deposits relative to the nations debt or GDP) does seem like an accident waiting to happen. There are other tax havens — Luxembourg, Switzerland, Cayman Islands, Bermuda, Singapore, Dubai, etc. — that have yet to have their crisis. This implies a full on financial crisis requires more than mere concentration of idle tax-avoiding capital. Something else must be the trigger.   Source: Bailout Insights: What Cyprus Tells Us about Germany’s Character Tyson Barker Spiegel, March 26, 2013 http://www.spiegel.de/international/europe/the-cyprus-bailout-reveals-german-fears-of-tax-havens-a-891063.html

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