January 2014 – Page 248

The “Kinks” Return As Treasury Bills Reprice Debt Ceiling Debacle

Just when funds thought it was safe to buy short-term Treasuries and rehypothecate them to immeasurable leverage, yields on Bills due after the February 7th debt-ceiling suspension ends are lifting significantly in recent days. Since the year-end liquidity squeeze, yields on the March bills have developed a hump indicating concerns beginning. Of course, levels remain very low for now but the ‘kink’ is notable.

Congress suspended the $16.7 trillion debt ceiling on Oct. 16 – a day before officials estimated the government would have exhausted its emergency borrowing authority. The suspension will last through Feb. 7, 2014. On Feb. 8, the debt limit will be reinstated reflecting the debt issued between Oct. 17 and Feb. 7, increasing the ceiling to roughly $17.3 trillion by then.

If lawmakers don’t act on the debt limit before Feb. 8, then the Treasury will employ “extraordinary measures” to keep the government afloat for a bit longer.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/TAwXYOwZLTc/story01.htm Tyler Durden

Incentives Matter: Sad Anecdotes From a Sapped France

Looking for Mr. GoodRock. ||| The French “lost
generation” story has become a
journalistic (and
cinematic) genre onto itself, as the population of
funny-accented expats swells in more dynamic places like New York,

London,
Los Angeles, and
Hong Kong. This big Newsweek take
on the topic, by a Brit named Janine di Giovanni who moved to
France with her Gallic husband a decade ago, provides a valuable
snapshot of what it looks like on the inside of a country slowly
but surely leaking its energy.

Though it rests on anecdotes from unnamed locals, the piece (for
me, anyway) contains the strong ring of familiarity, while also
providing a cautionary tale of what might happen if certain
American polities decide to
go more French. Excerpt:

As a new mother, I was surprised at the many state benefits to
be had if you filled out all the forms: Diapers were free; nannies
were tax-deductible; free nurseries existed in every neighborhood.
State social workers arrived at my door to help me “organize my
nursery.” My son’s school lunch consists of three courses, plus a
cheese plate.

But some of it is pure waste. The French state also paid for all
new mothers, including me, to see a physical therapist twice a week
to get our stomachs toned again. […]

When I began to look around, I saw people taking wild advantage
of the system. I had friends who belonged to trade unions, which
allowed them to take entire summers off and collect 55 percent
unemployment pay. From the time he was an able-bodied 30-year-old,
a cameraman friend worked five months a year and spent the
remaining seven months collecting state subsidies from the comfort
of his house in the south of France.

Another banker friend spent her three-month paid maternity leave
sailing around Guadeloupe – as it is part of France, she continued
to receive all the benefits.

Yet another banker friend got fired, then took off nearly three
years to find a new job, because the state was paying her so long
as she had no job. “Why not? I deserve it,” she said when I
questioned her. “I paid my benefits into the system.” Hers is an
attitude widely shared.

It’s a pretty comfy system for non-ambitious people who are able
to find work. The problem is that the number of those people

continues to shrink, while the potentially job-creating
ambitious seek a meaningful life elsewhere.

Whole thing
here.

from Hit & Run http://reason.com/blog/2014/01/06/incentives-matter-sad-anecdotes-from-a-s
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Instapundit: Consider Alternative Schooling

Writing in USA Today, Glenn
Reynolds, the Instapundit, sounds a call for alternative
education:

School was practice for working in the factory. Thus, the
traditional public school: like a factory, it runs by the bell.
Like machines in a factory, desks and students are lined up in
orderly rows. When shifts (classes) change, the bell rings again,
and students go on to the next class. And within each class, the
subjects are the same, the assignments are the same, and the
examinations are the same, regardless of the characteristics of
individual students.

This had its advantages back during
the Industrial
Revolution, an assembly-line era where uniformity was more
important than anything else, when Henry Ford was
happy to sell you a car in any color you wanted, so long as it
was black. But this is the
21st century, and now times have changed. You can buy a thousand
different kinds of shampoo, so why should your kid have only one
kind of education?

Read the whole thing.

And check out his new book
The New School: How the Information Age Will Save American
Education from Itself. I don’t fully agree with his
arguments in The New School, but nobody has been more persistent
and perceptive in calling attention to the higher-education bubble.
Totally worth a read.

Reynolds and I – along with a half-dozen other folks – discussed
“Where Higher Education Went Wrong” last February in Reason.

Read that here.

from Hit & Run http://reason.com/blog/2014/01/06/instapundit-consider-alternative-schooli
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U.S. Customs Destroy Rare Instruments, Livelihood, Won't Apologize

Holiday travel can be a hassle.
It can be an even bigger hassle when U.S. Customs and Border
Protection (CBP) officials destroy rare instruments on which your
livelihood depends.

That’s what happened to
Boujemaa Razgui, a renowned musician who was returning from
Morocco to his New York City residence in time for Christmas.
Razgui was transporting 11 rare handcrafted flutes, called neys, some of which he
manufactured in the US. Nevertheless, the CBP “identified the
instruments… as agricultural products that risked introducing
‘exotic plant pathogens’ in to the United States” and destroyed
them,
reports Foreign Policy.

Razgui was shocked to find his carrying case emptied.“I fly with
them in and out all the time and this is the first time there has
been a problem,” he
told the Boston Globe. “They told me they were
destroyed,” but “nobody talked to me. They said I have to write a
letter to the Department of Agriculture in Washington, D.C. This is
horrible. I don’t know what to do,” Razgui explained, “This is my
life.”

That’s no exaggeration. Razgui, who has performed with various
groups throughout the US for over a decade, is one of only 15
people in the country with this specific kind of flute. Razgui has
not yet determined how he will be able to fulfill his commitments
for upcoming performances.

When asked by Foreign Policy, the law enforcement
agency refuses to apologize to for the mishap. Officials insist
that the action was necessary, because of the potential threat that
“fresh bamboo canes” pose. The CBP’s website
states:

In general, bamboo that is not thoroughly
dried and is therefore still capable of propagation is prohibited
entry into the United States.
Bamboo that is thoroughly dried and split or cut lengthwise
(rendering it incapable of propagation) will be inspected upon
entry and released.

Unsplit dried bamboo canes/stakes/poles also are allowed entry
into the United States after inspection: however, if the bamboo
canes/stakes/poles are intended for garden or nursery use, the
shipment must be fumigated (T404-d treatment extended to 24 hours)
upon arrival at the U.S. port of entry.

Bamboo furniture, bamboo cloth, and other manufactured products
made of bamboo do not require fumigation and will be released upon
inspection.

The problem is, neys aren’t made of bamboo, and even if they
were, simply looking at them would be enough to tell that the
instruments were cut, dried, and obviously incapable of
propagation.

For more head-scratching policies from agencies that operate
under the Department of Homeland Security, watch ReasonTV’s video
on 12 banned
holiday items:

from Hit & Run http://reason.com/blog/2014/01/06/us-customs-destroy-rare-instruments-live
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U.S. Customs Destroy Rare Instruments, Livelihood, Won’t Apologize

Holiday travel can be a hassle.
It can be an even bigger hassle when U.S. Customs and Border
Protection (CBP) officials destroy rare instruments on which your
livelihood depends.

In general, bamboo that is not thoroughly
dried and is therefore still capable of propagation is prohibited
entry into the United States.
Bamboo that is thoroughly dried and split or cut lengthwise
(rendering it incapable of propagation) will be inspected upon
entry and released.

Unsplit dried bamboo canes/stakes/poles also are allowed entry
into the United States after inspection: however, if the bamboo
canes/stakes/poles are intended for garden or nursery use, the
shipment must be fumigated (T404-d treatment extended to 24 hours)
upon arrival at the U.S. port of entry.

Bamboo furniture, bamboo cloth, and other manufactured products
made of bamboo do not require fumigation and will be released upon
inspection.

The problem is, neys aren’t made of bamboo, and even if they
were, simply looking at them would be enough to tell that the
instruments were cut, dried, and obviously incapable of
propagation.

For more head-scratching policies from agencies that operate
under the Department of Homeland Security, watch ReasonTV’s video
on 12 banned
holiday items:

from Hit & Run http://reason.com/blog/2014/01/06/us-customs-destroy-rare-instruments-live
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Head Of China's Railway Company Commits Suicide: First Graft Probe Casualty?

Bai Zhongren, the president of state-run China Railway Group – the state-owned engineering giant behind many of the country’s largest railway projects – committed suicide over the weekend. As SCMP reports, Bai is among several senior railway officials and executives who have committed suicide since corruption scandals implicating the senior railway officials began to come to light three years ago.

However, there have been no direct links between China Railway Group and the corruption cases (yet); but Chinese courts are about to hand down verdicts for Zhang Shuguang, a former deputy chief engineer of the now-defunct Ministry of Railways, and Ding Shumiao, a businesswoman with close tie with disgraced former railway minister Liu Zhijun. Xinhua quotes a colleague as saying that part of the cause of Bai’s depression might be the heavy debts that his company has run up.

Via South China Morning Post,

Bai Zhongren, the president of China Railway Group, a state-owned engineering giant behind many of the country’s largest railway projects, jumped to his death over the weekend, Chinese media reported on Monday.

…

The 53-year-old executive jumped to his death after suffering from depression in recent years

…

Economic Information, a newspaper published by the official Xinhua News Agency, quoted a colleague as saying that part of the cause of Bai’s depression might be the heavy debts that his company has run up.

…

By the end of October, 2013, China Railways Group had total assets worth 626.5 billion yuan, and total outstanding debts of 531.9 billion yuan, with a debt-to-asset ratio of almost 85 per cent, according to the company’s Q3 filings.

Bai’s suicide came as Chinese courts are about to hand down verdicts for Zhang Shuguang, a former deputy chief engineer of the now-defunct Ministry and of Railways, and Ding Shumiao, a businesswoman with close tie with disgraced former railway minister Liu Zhijun.

…

Bai is among several senior railway officials and executives who have committed suicide since corruption scandals implicating the senior railway officials began to come to light three years ago. However, there have been no direct links between China Railway Group and the corruption cases.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/KrhVNMAIGtM/story01.htm Tyler Durden

Head Of China’s Railway Company Commits Suicide: First Graft Probe Casualty?

Via South China Morning Post,

Bai Zhongren, the president of China Railway Group, a state-owned engineering giant behind many of the country’s largest railway projects, jumped to his death over the weekend, Chinese media reported on Monday.

…

The 53-year-old executive jumped to his death after suffering from depression in recent years

…

Economic Information, a newspaper published by the official Xinhua News Agency, quoted a colleague as saying that part of the cause of Bai’s depression might be the heavy debts that his company has run up.

…

By the end of October, 2013, China Railways Group had total assets worth 626.5 billion yuan, and total outstanding debts of 531.9 billion yuan, with a debt-to-asset ratio of almost 85 per cent, according to the company’s Q3 filings.

Bai’s suicide came as Chinese courts are about to hand down verdicts for Zhang Shuguang, a former deputy chief engineer of the now-defunct Ministry and of Railways, and Ding Shumiao, a businesswoman with close tie with disgraced former railway minister Liu Zhijun.

…

Bai is among several senior railway officials and executives who have committed suicide since corruption scandals implicating the senior railway officials began to come to light three years ago. However, there have been no direct links between China Railway Group and the corruption cases.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/KrhVNMAIGtM/story01.htm Tyler Durden

A.M. Links: FBI Quietly Changes Primary Function, Senate Democrats To Focus on Middle Class, Angela Merkel Fractures Pelvis

The FBI has quietly replaced “law enforcement” with “national
security” as its declared primary function.
Senate Majority Leader Harry Reid (D- Nev.) said Sunday
that Democrats will focus on the middle class in 2014 and attempt
to extend emergency
unemployment benefits.
The Senate is poised to confirm Janet Yellen as the next

Federal Reserve chair, making her one of the most powerful
figures in world economic circles.
Citing health concerns in her family, Liz Cheney is
ending her campaign for Senate in Wyoming.
German Chancellor Angela Merkel
fractured her pelvis while skiing, forcing her to cancel
meetings for the next three weeks.
A senior Iranian military official offered
limited military
aid to Iraq in order to battle Al Qaeda fighters in the
neighboring country.

Follow Reason and Reason 24/7 on
Twitter, and like us on Facebook. You
can also get the top stories mailed to
you—sign
up here.

from Hit & Run http://reason.com/blog/2014/01/06/am-links-fbi-quietly-changes-primary-fun
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Investors Literally "Worried Sick" About Stock Losses

“It’s a very straightforward result,” UCSD professors Joseph Engleberg calmly states, hospitalizations rise on days when shares fall, and “people are hospitalized disproportionately for mental conditions.” Equity-market losses appeared to induce 3,700 market-related hospitalizations a year in California, which implies visits add roughly $650 million a year to U.S. health-care costs when data from the most-populous state are extrapolated nationally – another additional cost of QE? The findings, Bloomberg reports, show a one-day drop in equities of around 1.5% is followed by about a 0.26% increase in hospital admissions on average over the next two days.

Via Bloomberg,

Declining stocks worry people sick, if hospital records are any guide.

A one-day drop in equities of around 1.5 percent is followed by about a 0.26 percent increase in hospital admissions on average over the next two days, according to a March 2013 study by Joseph Engelberg and Christopher Parsons, associate professors of finance at the University of California at San Diego. The impact on psychological conditions such as anxiety or panic attacks is even stronger and more immediate, with admissions jumping twice that much in one day.

“It’s a very straightforward result,” Engelberg said yesterday at the American Economic Association’s annual meeting in Philadelphia, where he presented the findings. The results were based on almost three decades of daily admission data for California hospitals. Hospitalizations rise on days when shares fall, and “people are hospitalized disproportionately for mental conditions.”

Equity-market losses appeared to induce 3,700 market-related hospitalizations a year in California, which implies visits add roughly $650 million a year to U.S. health-care costs when data from the most-populous state are extrapolated nationally, Engelberg and Parsons estimated. They cited Census Bureau data showing an average hospitalization event costs around $21,000.

…

“People get stressed out and anxious and depressed when the stock market performs poorly,” Engelberg said in an interview after his presentation. “That may be very obvious, but I think this is the first paper to come along and try to take a good step at quantifying how big that is.”

The effect of a large market drop is twice as strong during periods of low volatility because “extreme returns are more surprising to investors,” Engelberg and Parsons concluded.

“Your expectations are set by what you experienced in the recent past,” Engelberg said in the interview. “If it wasn’t very bumpy and you see a big bump down today, that’s more likely to get you depressed or stressed or anxious than if you saw a lot of bumps in the past year.”

…

“When the market tanked, heart attack rates went up,” she said.

…

“A lot of behavioral finance is about how your mind affects markets and very little talks about the other way around,” Engelberg said in the interview. “We have evidence of causality coming from markets coming back to investor psychology, and that’s been a missing component in terms of empirical findings in a lot of prior research.”

So it would seem that Obamacare is perfectly timed as the bubbles the Fed has blown (and volatility suppression) will end up causing widespread illness…?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/dPis8ELiuOo/story01.htm Tyler Durden

Investors Literally “Worried Sick” About Stock Losses

Via Bloomberg,

Declining stocks worry people sick, if hospital records are any guide.

A one-day drop in equities of around 1.5 percent is followed by about a 0.26 percent increase in hospital admissions on average over the next two days, according to a March 2013 study by Joseph Engelberg and Christopher Parsons, associate professors of finance at the University of California at San Diego. The impact on psychological conditions such as anxiety or panic attacks is even stronger and more immediate, with admissions jumping twice that much in one day.

“It’s a very straightforward result,” Engelberg said yesterday at the American Economic Association’s annual meeting in Philadelphia, where he presented the findings. The results were based on almost three decades of daily admission data for California hospitals. Hospitalizations rise on days when shares fall, and “people are hospitalized disproportionately for mental conditions.”

Equity-market losses appeared to induce 3,700 market-related hospitalizations a year in California, which implies visits add roughly $650 million a year to U.S. health-care costs when data from the most-populous state are extrapolated nationally, Engelberg and Parsons estimated. They cited Census Bureau data showing an average hospitalization event costs around $21,000.

…

“People get stressed out and anxious and depressed when the stock market performs poorly,” Engelberg said in an interview after his presentation. “That may be very obvious, but I think this is the first paper to come along and try to take a good step at quantifying how big that is.”

The effect of a large market drop is twice as strong during periods of low volatility because “extreme returns are more surprising to investors,” Engelberg and Parsons concluded.

“Your expectations are set by what you experienced in the recent past,” Engelberg said in the interview. “If it wasn’t very bumpy and you see a big bump down today, that’s more likely to get you depressed or stressed or anxious than if you saw a lot of bumps in the past year.”

…

“When the market tanked, heart attack rates went up,” she said.

…

“A lot of behavioral finance is about how your mind affects markets and very little talks about the other way around,” Engelberg said in the interview. “We have evidence of causality coming from markets coming back to investor psychology, and that’s been a missing component in terms of empirical findings in a lot of prior research.”

So it would seem that Obamacare is perfectly timed as the bubbles the Fed has blown (and volatility suppression) will end up causing widespread illness…?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/dPis8ELiuOo/story01.htm Tyler Durden