Farewell. The Flying Pig Has Left The Building.

Steve Hynd, August 16, 2012

After four years on the Typepad site, eight years total blogging, Newshoggers is closing it's doors today. We've been coasting the last year or so, with many of us moving on to bigger projects (Hey, Eric!) or simply running out of blogging enthusiasm, and it's time to give the old flying pig a rest.

We've done okay over those eight years, although never being quite PC enough to gain wider acceptance from the partisan "party right or wrong" crowds. We like to think we moved political conversations a little, on the ever-present wish to rush to war with Iran, on the need for a real Left that isn't licking corporatist Dem boots every cycle, on America's foreign misadventures in Afghanistan and Iraq. We like to think we made a small difference while writing under that flying pig banner. We did pretty good for a bunch with no ties to big-party apparatuses or think tanks.

Those eight years of blogging will still exist. Because we're ending this typepad account, we've been archiving the typepad blog here. And the original blogger archive is still here. There will still be new content from the old 'hoggers crew too. Ron writes for The Moderate Voice, I post at The Agonist and Eric Martin's lucid foreign policy thoughts can be read at Democracy Arsenal.

I'd like to thank all our regular commenters, readers and the other bloggers who regularly linked to our posts over the years to agree or disagree. You all made writing for 'hoggers an amazingly fun and stimulating experience.

Thank you very much.

Note: This is an archive copy of Newshoggers. Most of the pictures are gone but the words are all here. There may be some occasional new content, John may do some posts and Ron will cross post some of his contributions to The Moderate Voice so check back.


Friday, June 15, 2012

Dr. Doom -- A Global Perfect Storm

By John Ballard

He's not called Dr. Doom for nothing. Yesterday's summary of global economics from Nouriel Roubini is enough to make readers convert all investments to hard assets -- land, food supplies, a good bike and a bullet-proof vest.

  • eurozone crisis is worsening

  • disorderly breakup of the eurozone remains possible

  • US economic performance is weakening

  • political gridlock over fiscal adjustment is likely to persist

  • China, its growth model unsustainable, could be underwater by 2013

  • slowdown in the US, the eurozone, and China already implies a massive drag on growth in other emerging markets, owing to their trade and financial links with the US and the European Union (that is, no "decoupling" has occurred). At the same time, the lack of structural reforms in emerging markets, together with their move towards greater state capitalism, is hampering growth and will reduce their resiliency.

  • tensions in the Middle East between Israel and the US on one side and Iran on the other on the issue of nuclear proliferation could reach a boil by 2013

  • Compared to 2008-2009, when policymakers had ample space to act, monetary and fiscal authorities are running out of policy bullets (or, more cynically, policy rabbits to pull out of their hats). Monetary policy is constrained by the proximity to zero interest rates and repeated rounds of quantitative easing. Indeed, economies and markets no longer face liquidity problems, but rather credit and insolvency crises. Meanwhile, unsustainable budget deficits and public debt in most advanced economies have severely limited the scope for further fiscal stimulus.

    ==?To prevent a disorderly outcome in the eurozone, today's fiscal austerity should be much more gradual, a growth compact should complement the EU's new fiscal compact, and a fiscal union with debt mutualization (Eurobonds) should be implemented. In addition, a full banking union, starting with eurozone-wide deposit insurance, should be initiated, and moves toward greater political integration must be considered, even as Greece leaves the eurozone. Unfortunately, Germany resists all of these key policy measures, as it is fixated on the credit risk to which its taxpayers would be exposed with greater economic, fiscal, and banking integration. As a result, the probability of a eurozone disaster is rising.

    And, while the cloud over the eurozone may be the largest to burst, it is not the only one threatening the global economy. Batten down the hatches.

There are a handful of comments as well, the best of which reads In the immortal (paraphrased) words of Jon Stewart: There can't be as many perfect storms as pundits say there are. Maybe these are ordinary storms and we're just on a shitty boat?

I'm less pessimistic than Dr. Roubini, partly because I'm an irrational optimist, but also because a Soros analysis allows for unpredictable events and human responses that psychologists call lateral thinking.

...Robert Merton wrote about self-fulfilling prophecies and the bandwagon effect, Keynes compared financial markets to a beauty contest where the participants had to guess who would be the most popular choice. But starting from fallibility and reflexivity I focused on a problem area, namely the role of misconceptions and misunderstandings in shaping the course of events that mainstream economics tried to ignore. This has made my interpretation of reality more realistic than the prevailing paradigm.

Among other things, I developed a model of a boom-bust process or bubble which is endogenous to financial markets, not the result of external shocks. According to my theory, financial bubbles are not a purely psychological phenomenon. They have two components: a trend that prevails in reality and a misinterpretation of that trend....

And through the Soros lens the Roubini predictions can be seen as a collection of self-fulfilling prophesies. Even if most of them prove true, all that is necessary for the aggregate to be wrong is one or two unexpected surprises.


  1. I'm more pessimistic than you are, and maybe even more than Roubini, because the facts presented to us are always slanted toward the good side. Unemployment is stated as 8.2%, for instance, because they leave out those who are not looking for work and the involuntarily self employed. Inflation is understated, usually, by omitting energy and food from the calculation. Profits are stated in absolute dollars instead of profit margins. Etc.
    Put all of these factors in real numbers, actual unemployment, inflation based on necessesities rather than optionals, profits in terms of declining margins rather than inflation enhanced absolute dollars, and you will see how bad things are actually getting.

  2. You and Nouriel could be BFF. And you may well be right.
    Couple of thoughts...
    Margins are more significant than profits except if the corporate tax rates the big shots are forever complaining about are even half as bad as they claim there are lots of ways to sock away and redirect new assets other than declaring them as profits. (My favorite is when CEO deductability was capped at a million dollars the immediate corporate response was to make sure their CEOs got a million dollars -- many got raises -- and stock options -- off the books cuz they have no specific value for accounting purposes -- received the new compensation.)
    And I'm really curious to know what accounting rules apply, if any, trans-nationally since so many companies now have a global footprint. I'm sure there are a variety of ways to charge the building costs, for instance, of a fried chicken store in Bankok or Nairobi that wouldn't work in Cincinnati.
    That inflation business is a puzzle. I've been expecting a return to double-digit inflation for the last thirty years and it hasn't come yet. I haven't figured out why, but I suspect it has something to do with debt, which has grown to historic levels, and is basically another way of "printing money."

  3. I think this is the twilight of this civilization. As has happened in the past the institutions have simply become so complex they are unable to respond to external changes. The only question is whether the decline will be fast or slow. I'm leaning toward fast.