Book Review: Storefront Newsprints

Storefront Newsprints: 1982-2009 by Storefront for Art and Architecture
Storefront Books, 2009
2-volume paperback with slip case, 1,000 pages



Anybody who has visited the Storefront for Art and Architecture has probably walked away with a folded piece of newsprint with details on the exhibition on display. Since my first visit in 1997 I've amassed quite a few, storing them in a shoebox with pamphlets from other museums and venues I've visited in New York City and beyond. The Storefront newsprints have a way of standing out from the rest, in large part from the material they are printed on as well as the monochrome graphics employed. They are anachronistic without being reactionary. They recall a time before ink-jet printers and digital publishing, a time of literal cut-and-paste graphic design and printing in local copy shops. Yet the newsprint is a consistent medium in the nearly 30-year Storefront history, spanning a time of great changes arising from digital technologies, be it graphic design, publishing, or architecture. That Storefront continues to use the format points to a desire to keep in mind the organization's origins, even as it grows in scope and influence beyond the confines of 97 Kenmare Street.



Storefront Newsprints collects over 150 of the newsletters from its early days on Prince Street to last year, reprinted in two volumes nicely packaged in a black slip case. This is book as historical artifact, focused on what could be considered Storefront's unintentional archive. Not all of the text in the reprints is legible (essays by Lebbeus Woods, Michael Webb, and Vito Acconci are reprinted in easy-to-read format), but it is the images, layouts, and most of all the subject matter that rises to the fore while perusing the collection.

Storefront Newsprints comes at the end of Joseph Grima's three-year directorship. Heading for Italy and Domus, he followed Sarah Herda, who is now at the helm of the Graham Foundation in Chicago after her eight-years at Storefront. Before them founder Kyong Park directed the space's exhibitions, and Grima's interview with him is particularly revealing about the organization and its newsprints. As the Storefront searches for Grima's replacement, the past tenuousness of its existence seems to have given way to a widespread appreciation of the organizations, its space (restored in 2008), and its place within the broader architectural community. The influence of its programs reaches beyond its 868sf home (PDF link), but the newsprints are unique artifacts for those able to visit the gallery in person...and now for those willing to spend $49.

US: or at Storefront Bookstore

Greece Heads Back To Square One As EU's Bazooka Was Nothing More Than A Water Pistol

Europe's rescue plan for Greece is now back at square one. The reason the plan failed is there never really was a plan to begin with, just bazooka talk.

Please consider Greece May Be Heading Back to �Square One� on Aid as Bonds Fall

Europe�s week-old rescue plan for Greece has so far failed to do what its leaders predicted: reduce borrowing costs for the region�s most indebted country.

The yield on 10-year Greek government bonds has increased 24 basis points to 6.522 percent since EU leaders agreed to the aid blueprint on March 25. That�s the highest in a month and more than double the rate paid by Germany. Seven-year bonds sold by Greece on March 29 fell for a second day yesterday.

�What they were hoping for was to set up some sort of arrangement that never has to be used,� said Phyllis Reed, head of bond research in London at Kleinwort Benson, which manages about $32 billion. �The markets have sniffed that out and it seems like we�re heading back to square one.�

IMF Managing Director Dominique Strauss-Kahn said on March 30 the lender would set the terms of any loans to Greece just as it does with other countries. Trichet said before the summit that ceding control to the IMF would be �very, very bad.� He later changed his tone to say he was �pleased� with the outcome.

�It�s supposed to be a joint EU-IMF thing, but it sounds like the IMF have plans of their own,� said Reed. �There are still a lot of question marks.�

With investors keeping up the pressure, Greek opposition politicians are criticizing the EU plan. Coalition of the Left deputy Dimitris Papadimoulis yesterday mocked Finance Minister George Papaconstantinou for comparing aid to a �loaded gun� that would threaten markets.

�The gun,� he said, �has proved to be a water-pistol.�

Waterless Water Pistol

Rising Greek bond yields suggest that the EU's loaded gun was not a bazooka but a water pistol without water.

That will remain the case as long as Germany and France argue about what needs to happen.

German Chancellor Angela Merkel even asked for EU treaty changes so that serial violators of EMU rules could be expelled from the euro. For details, please see Battle in EU Erupts Between Germany and France Over the "Club Med" Nations and Germany's Export Policy

Few seem to believe Greece can carry out the necessary budget reductions. The situation is further complicated by the fact that France does not want any major role for the IMF, and preferably, no role at all.

The crucial question however, is "How much longer will it be before the market starts focusing on Spain as an even bigger problem?"

Flashback March 13, 2010: The Wall Street Journal is reporting No Need for Greek Bailout Now, France's Lagarde Says

Credible efforts by Greece's government to clean up its finances have so far negated the need for any bailout from the European Union, French Finance Minister Christine Lagarde said Friday.

Ms. Lagarde said that "technical experts" at the EU have been working on a contingency plan, so that if the need arose, "all we would have to do is press the button."

Show Me The Button

Ms. Lagarde said that if the need arose, "all we would have to do is press the button." That is the "I have a bazooka in my pocket" ploy.

The need has now arisen, and the market says "show me me the button." So where is it? It's pretty hard to press a button when it does not even exist.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

A spring table

 Well, it�s in the 70�s here today, and the weather has been glorious for weeks now � SO unlike the Midwest. I�m crossing fingers and toes that there is no more snow! Puhhhleaze? Considering it�s supposed to be 84 degrees here tomorrow, you�d think we�re safe.

When I showed you the cute little Dollar Tree bird in this post, I told you I had some ideas in mind for others as well. I was so sure my idea would be adorable, I drove back to the dollar store at 8:55 that night, grabbing the last few I could find. (So sorry if you were looking for them�)  ;)

My idea was to use them on the dining room table. The bowls I bought last year for the place settings (from Pier 1) have been such fun to decorate with each holiday/season!

My first thought was to nestle them into some Spanish moss, but then I had a bit of a freak out that the moss would stain the white bowls. Probably wouldn�t � but my freak out made the end result even better!

To protect the bowl, I first used crinkled up tissue paper and made a �nest� � but then it hit me. What�s natural, springy, pretty and moss-stain protecting? Burlap baby! And I already had it!:

I have six little birds total, but I am using a couple elsewhere, so I still needed to fill two place settings.

When Maryann posted her twine/jute covered eggs back in February, I was HOOKED. I am a sucker for jute. I don�t know what it is � but I love it on just about anything.

So I made some of my own jute covered eggs a few weeks ago � just using plastic Easter eggs we had and hot glue. Fareee!

Last week I found some white yarn in my craft stuff and covered a couple with that as well:

 

Warning:  This cuteness takes foreva and a day to attain. I think about 15 minutes per egg. But it�s good mind-numbing activity while I watch my shows. ;)

I wanted to keep the centerpiece simple but wanted to add a little somethin�. I found some mossy �blanket� stuff at Joann�s today that was perfect to line the bottom:

I just cut it to fit and I love it! It was pricey -- $9 � but it is reusable.

A couple weeks ago I decided to start using a few of the candle holders as vases, so I�ve been filling a few of them:

If you look carefully you can see the toys on the floor�shhhhh. Nothing but the best for you all!

I had forgotten what a great deal flowers are at Trader Joe�s until my friend Kate mentioned it. (You must see her dining room. Swoon.)

Some of these have lasted for two weeks now! The tulips were $10 for 20. Hard to beat!:

   

I absolutely love how fresh and bright the table is!

    And I wuv you, you cute little birdies! Kisses!

I  have BIG plans for our hutch � I can�t wait to get working on it. I don�t know if it�s going to work, but I�ll let you know, of course.  (And no, I�m not painting it!)

To see how I made the centerpiece, go here.

For a recap of the dining room redo, go here.

Time To Take Back The Country; Congressional Candidates Deserving Your Support: Ron Paul, John Dennis, BJ Lawson, Rand Paul

It's time to take back our country. You can help. Moreover, you must help or it will not get done. There is a long list of politicians who need to be booted and some excellent choices for their replacements.

Here is a partial list of candidates I openly endorse. More names will follow later.

BJ Lawson For North Carolina 4th District

I have high hopes for BJ Lawson.
He will win with your help.
Please support BJ Lawson District 4 North Carolina
Click here to Volunteer Services For BJ Lawson

John Dennis For California 8th District

John Dennis is running against Nancy Pelosi.
He has a genuine shot but he needs your help to pull off an upset.

Please support John Dennis for District 8 California
Click here to Volunteer Services For John Dennis

Ron Paul For Texas 14th District

Please support Ron Paul for District 14 Texas
Click here to Volunteer Services For Ron Paul

Rand Paul For US Senate Kentucky

Rand Paul is ahead in some polls.
He needs your help to stay that way.

Please support Rand Paul For US Senate.
Click here to Volunteer Services For Rand Paul

Deserving Of Your Support

The above list is by no means complete.
I will add more names later.

All of the above are sound money constitutionalists who believe you know what to do with your money better than big government does. Every one of them deserves your support.

Their need for help goes far beyond cash contributions. Please, volunteer some time and sponsor signs, especially if you live in their district.

Things You Can Do

• Host a Private Gathering
• Phone Banking
• Door-to-Door Canvassing
• Be a Precinct Leader
• Staff Events
• Fund Raising
• Stuff Envelopes
• Write Letters to the Editor
• Display a Yard Sign
• Display a Bumper Sticker

For readers who own printing businesses, please volunteer to print yard signs or brochures for these candidates.

Every candidate on the above list is in favor of less government not more. All will support policies that will lead to business formation and more jobs.

Please do what you can to help.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

BLS Live Question and Answer Session on Friday, April 2nd

The BLS has a Live Question and Answer session this Friday between 9:30 and 10:30 EST.

Requirements

1. Access to http://www.coveritlive.com
2. Version 10 or later of the Adobe Flash Player

You can submit questions in advance via Question and Answer Feedback Form

Please save your question in case something goes wrong with the form or you need to resubmit it.

Seasonal Adjustment Amplitude

My question is on the the increasing amplitude of BLS seasonal adjustments as noted in BLS Seasonal Adjustments Gone Haywire; 11% Unemployment Coming by May?

Seasonally Unadjusted Unemployment vs. Unadjusted Unemployment



click on chart for sharper image

The above chart shows how the BLS smoothes the unemployment rate to account for seasonal trends. It also give as hint as to an increasing magnitude of that smoothing.

To highlight the month to month variances, I added a column to show the amplitude of the seasonal adjustments. The result is this chart.

Unadjusted Unemployment Minus Seasonally Adjusted Unemployment



click on chart for sharper image

Seasonal Adjustment Highlights

• There is always a big BLS adjustment in January
• There is always a reversion to the mean that overshoots to the downside between March and April
• There is always a secondary rebound back above the 0.0% line in July, followed by a smaller overshoot to the downside in October.

The problem is in the increasing amplitude of these swings, in both directions.

The BLS attempts to smooth trends in unemployment with seasonal adjustments but those swings have increasing amplitude for the last two years. One explanation I have heard is the BLS is assuming a normal population basis and applies seasonality to that.

If so, I believe their methodology is distorted by the fact there are now 14.9 million unemployed. One should not assume the same seasonal bounce with so many out of work.

Without an explanation from the BLS though, we are guessing at the cause. If the BLS has an explanation, I will post it.

Addendum:

Here is the exact question I submitted. ....

I understand the point of seasonal adjustment to smooth out seasonal hiring variances. And for 6-8 straight years the "adjustment" in January as calculated by the difference between the seasonal and unadjusted unemployment was about .4% to .5%

However, the last two years it was a full 1%.
I have a chart that shows this:
https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQVCQwt0YrLvIfmkJL5WydKn4ra0radf3TFTrXPS06X62q6y25UzRk25FMCd-jzZSftkm5seEkyUK1e4ghw_L60ImbKjuCg9zJkd4stOh704yEOicraEGYjwh2_wCBAFTHGV592PqWrWEi/s1600-h/seasonally+Adjusted+vs+unadjusted+unemployment2.png

I discuss in more detail here:
http://globaleconomicanalysis.blogspot.com/2010/03/bls-live-question-and-answer-session-on.html

How do you account for these big out of the norm by .5% or so adjustments in January for the last two years?

My expectation is this year will be revised away later just as happened in 2009 with the result being January 2010 unemployment is understated by .5% minimum.

Of course the census hiring this year will add to the problem of figuring out exactly what is going on.

Mish

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Irish Banks Need $43 Billion in New Capital as "Worst Fears Have Been Surpassed�

Inquiring minds note Ireland's finance minister is shocked to discover Irish Banks Need $43 Billion in New Capital on account of �Appalling� Lending.

Ireland�s banks need $43 billion in new capital after �appalling� lending decisions left the country�s financial system on the brink of collapse.

�Our worst fears have been surpassed,� Finance Minister Brian Lenihan said in the parliament in Dublin yesterday. �Irish banking made appalling lending decisions that will cost the taxpayer dearly for years to come.�

The agency aims to cleanse banks of toxic loans, the legacy of plunging real-estate prices and the country�s deepest ever recession. In all, it will buy loans with a book value of 80 billion euros ($107 billion), about half the size of the economy.

�The information that has emerged from the banks in the course of the NAMA process is truly shocking,� Lenihan said.

Dublin-based Allied Irish needs to raise 7.4 billion euros to meet the capital targets, while cross-town rival Bank of Ireland will need 2.66 billion euros. Anglo Irish Bank Corp., nationalized last year, may need as much 18.3 billion euros. Customer-owned lenders Irish Nationwide and EBS will need 2.6 billion euros and 875 million euros, respectively.

�The regulator is taking the bank system by the scruff of the neck,� said James Forbes, senior equity strategist at Irish Life Investment Managers in Dublin. �Allied Irish has a lot of work to do to avoid majority state ownership, Bank of Ireland less so.�

Ireland may not be able to afford to pump more money into the banks. The budget deficit widened to 11.7 percent of gross domestic product last year, almost four times the European Union limit, and the government spent the past year trying to convince investors the state is in control of its finances.

�The bank losses, awful as they are, represent a one-off hit. It�s water under the bridge,� said Ciaran O�Hagan, a Paris-based fixed-income strategist at Societe Generale SA. �What�s of more concern for investors in government bonds is the budget deficit. Slashing the chronic overspending and raising taxation by the Irish state is vital.�

Economic Hit Parade

US: States have $5.17 Trillion in Pension Obligations, Gap is $3.23 Trillion; State Debt as Share of GDP

China: 10 Signs of Speculative Mania

Spain, UK, Japan, Greece: Eurozone Structural Problems; Spain's Economic Woes; Pain In Britain; Deflation Persists In Japan

US, Canada: California USA vs. Ontario Canada - Which State (Province) Is In Worse Shape? Canadian Banks vs. US Banks Comparison

Australia: Money Madness In Oz

Is any major country in good shape?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

States have $5.17 Trillion in Pension Obligations, Gap is $3.23 Trillion; State Debt as Share of GDP

As the jobless yet supposedly nascent recovery plods on, states are finding it increasingly difficult to ignore their fiscal woes and pension deficits. The New York Times has some details in State Debt Woes Grow Too Big to Camouflage.

California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink � budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.

California�s stated debt � the value of all its bonds outstanding � looks manageable, at just 8 percent of its total economy. But California has big unstated debts, too. If the fair value of the shortfall in California�s big pension fund is counted, for instance, the state�s debt burden more than quadruples, to 37 percent of its economic output, according to one calculation.

Unstated debts pose a bigger problem to states with smaller economies. If Rhode Island were a country, the fair value of its pension debt would push it outside the maximum permitted by the euro zone, which tries to limit government debt to 60 percent of gross domestic product, according to Andrew Biggs, an economist with the American Enterprise Institute who has been analyzing state debt. Alaska would not qualify either.

Professor Rogoff, who has spent most of his career studying global debt crises, has combed through several centuries� worth of records with a fellow economist, Carmen M. Reinhart of the University of Maryland, looking for signs that a country was about to default.

�When an accident is waiting to happen, it eventually does,� the two economists wrote in their book, titled �This Time Is Different� � the words often on the lips of policy makers just before a debt bomb exploded. �But the exact timing can be very difficult to guess, and a crisis that seems imminent can sometimes take years to ignite.�

Some economists think the last straw for states and cities will be debt hidden in their pension obligations.

Joshua Rauh, an economist at Northwestern University, and Robert Novy-Marx of the University of Chicago, recently recalculated the value of the 50 states� pension obligations the way the bond markets value debt. They put the number at $5.17 trillion.

After the $1.94 trillion set aside in state pension funds was subtracted, there was a gap of $3.23 trillion � more than three times the amount the states owe their bondholders.

In Illinois, the state comptroller recently said the state was nearly $9 billion behind on its bills to vendors, which he called an �ongoing fiscal disaster.� On Monday, Fitch Ratings downgraded several categories of Illinois�s debt, citing the state�s accounts payable backlog. California had to pay its vendors with i.o.u.�s last year.

�These are the things that can precipitate a crisis,� Mr. Rauh said.

Creative Ways Of Hiding Debt

• New Hampshire took $110 million from a medical malpractice insurance pool to "balance its budget". The State Supreme Court said put it back.
• Colorado tried to grab a $500 million surplus from Pinnacol Assurance, a state workers� compensation insurer that was privatized in 2002.
• Hawaii went to a four-day school week.
• Connecticut tried to issue its own accounting rules.
• California is making companies pay 70 percent of their 2010 taxes by June 15.
• New Jersey and other states make their budgets look balanced by pushing debts into the future. While Greece used a type of foreign-exchange trade to hide debt, the derivatives popular with states and cities have been interest-rate swaps, contracts to hedge against changing rates.
  

The above points summarized from the article.

Debt as Share of GDP



Fictitious Accounting

Fictitious accounting allows states to pretend their pension plans are in better shape than they really are. Hawaii, Montana, New Jersey, Illinois, Mississippi, Ohio, New Mexico, Rhode Island, and Alaska all have unfunded liabilities of 50% or greater. 20 states have unfunded pension liabilities of 40% or greater.

Most states have pension plan assumptions that assume a 7% rate of return or higher. Such returns simply will not happen. Worse yet, another downturn will cripple states.

$5.17 trillion in pension obligations is a hell of a lot of money. How will it be paid? The answer is it won't.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Extracts of local distance

Extracts of local distance is a project by Benjamin Maus, Frederic Gmeiner and Thorsten Posselt. "Countless fragments of existing architectural photography are merged into multilayered shapes. The resulting collages introduce a third abstract point of view next to the original ones of architect and photographer." Take a look at the project video:

Extracts of Local Distance from STOESELTNTPRO on Vimeo.

Now take a look at one of the finished pieces:


[Elbberg Campus, top with detail below | image source]

The project, Elbberg Campus by BRT Architekten was featured on my weekly page in 2004:





The original photographer is Klaus Frahm, though I'm not sure if the three photos from my feature are the ones used for manipulation. Pieces of the wood louvers, curling metal facade, and wood decking can be seen in the collage, taking the space between the buildings and making it 100 times more dynamic. The image recalls Zaha Hadid's paintings, but it also makes me think of exploded diagrams, where pieces are pulled away from their final location for ease of understanding. In a sense these collages do the same thing, they extract information from the architectural photography and isolate individual pieces for regrouping into something new yet still recalling the original. Do the technique and its result have the potential to reorient how architects design space? Or are they just a commentary on the fairly consistent world of architectural photography today? Whatever their influence, they are striking images that I'm sure most architects would love to have gracing their walls.

(via PYTR 75)

Why is Google really rolling out Google Analytics opt-out plug-in?

Last week I wrote about a browser plug-in that will allow people to opt-out of the Google Analytics cookie. The release of this plug-in seems to be a proactive step towards another announcement.

Eric Peterson, on his blog, voiced his opinion on why Google is rolling out this plug-in. I think Eric has a point in his post about Google trying to make a push into Federal Government web sites and this roll out is a check-box to satisfy the needs of privacy advocates.

However, I am still not entirely clear on what Google will get if it can�t use all the data that it will collect on Federal Government website? It won�t be able to use in any way�well maybe at an aggregate level to compete with the likes of ComScore. So what do I think the reason is?

Behavioral Targeting

I think the real answer to Google Analytics� rolling out Opt-out is �Behavioral Targeting�.
Google Analytics is deployed on thousands of websites and collects a wealth of data. However, so far this data is used by individual sites to optimize their ad spend and improve the site for customers while improving the websites impact on the bottom line. Google has not really used that data much other than providing benchmarking reports in Google Analytics. I think the time has come for Google to start using Google Analytics data to make more money.

Google Analytics Data Sharing

Remember, in 2006 Google Analytics started asking GA accounts to opt-in/opt-out of data sharing. As I wrote in my blog post on Google Analytics Data Sharing, �data sharing� was a step towards using Google Analytics data for behavioral targeting. This opt-out plug-in seems to be a next step in that direction.

Limited functionality of Adwords Remarketing

Last week Google Adwords announced the roll-out of �Remarketing� feature that will allow advertisers to remarket to the visitors (cookies) who came to their sites but left without taking the desired action i.e. without converting (this is also called Retargeting, a form of Behavioral Targeting). For this feature to work, Adwords advertisers will have to put a small script and identify the people (cookies) whom they want to target.
The functionality to identify the segment that you want to retarget seems to be very limited in Adwords.

Google Analytics role in enhancing Adwords Remarketing

Now imagine, you can create complex segment in Google Analytics and then use Adwords to target the visitors who fall in that segment. Won�t that be nice? Well that can�t happen unless you use Google Analytics. Here is an example to make this clear:
I want to target visitors who viewed more than 3 products and looked at the contact us page and then left without converting (or it could be more complex than this).
This is a segment that I won�t be able to create easily in Adwords without some coding on my pages. Using Google Analytics, advanced segment functionality this is a piece of cake. I create my segment then use Adwords to remarket to visitors who fall in that segment. Won�t that be more powerful? I think that�s where the money is.

Other Behavioral Targeting Scenarios with Google Analytics

Let�s take a hypothetical example to see how this will work.

Say I write a blog on luxury cars. I use Google Analytics as my web analytics tool (it is free, so why not). I don�t have real business model but I use Adsense ads to make some extra money. Since my blog is really popular I get lot of traffic. My blog reader are those who have interest in luxury cars because that�s all I write about.

Now imagine Google asks me to pool my visitors� information, collected in Google Analytics, into a pool that they can use for advertising purposes. They tell me that by doing so I will be able to make some more money from my visitors even when the visitors have left my site. Hmm� free money. Sure :)

How will Google use that data?

Google will identify the visitors who come to my blog, read articles, write comments, come often etc. They will then put the visitors (cookies) who fulfill certain criteria (as defined by Google or the Advertiser) in a segment called �Luxury Car Enthusiast�. They will pool my data with other similar sites or similar pages on other sites to create a bigger pool than my site has to offer. Google now has a set of cookies who are interested in luxury cars.

BMW creates a campaign in Adwords to reach �Luxury Car Enthusiasts�. They are willing to play 2X-3X CPC or CPM to reach this target.

A visitor, who left my site (A) and lands on a site (B) that, has nothing to do with luxury cars. Google can identify that visitor because that visitor is in the pool of cookies that belong to �Luxury Car Enthusiasts� segment. Google shows this visitor an ad from BMW on Site B. Visitor sees the ad that matches his/her interest and the advertiser reaches their target.

Note: This all is a speculation by me and I have no official information.

Win-Win Situation

• BMW finds its target
• Google gets more money for the same ad slot.
• Publisher of the ad makes more money.
• Sites, which pool their visitors in this segment, get a cut.

What does GA Plug-in has to do with all this?

Behavioral Targeting has been under scrutiny for a long time and there is a big uproar about tracking people. Privacy advocates want an easy way for people to opt-out of Behavioral targeting and this plug-in seems to be a proactive step in that direction.

What do you think?

---

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Post your open jobs on Web Analytics Job Board

• Senior Data Analyst
  at Looksmart (San Francisco, CA)

10 Signs of Speculative Mania in China

Inquiring minds are reading a GMO white paper on China�s Red Flags

In the aftermath of the credit crunch, the outlook for most developed economies appears pretty bleak. Households need to deleverage. Western governments will have to tighten their purse strings. Faced with such grim prospects at home, many investors are turning their attention toward China. It�s easy to see why they are excited. China combines size � 1.3 billion inhabitants � with tremendous growth prospects. Current income per capita is roughly one-tenth of U.S. levels. The People�s Republic also has a great track record. Over the past thirty years, China�s Gross Domestic Product has increased sixteen-fold.

So what�s the catch? The trouble is that China today exhibits many of the characteristics of great speculative manias. The aim of this paper is to describe the common features of some of the great historical bubbles and outline China�s current vulnerability.

Past manias and financial crises have shared many common characteristics. Below is an attempt to list ten aspects of great bubbles over the past three centuries.

1. Great investment debacles generally start out with a compelling growth story. This may be attached to some revolutionary new technology, such as railways in the nineteenth century, radio in the 1920s, or more recently the Internet. Even when the new technology is for real, prospective rates of growth may beexaggerated. Early growth spurts are commonly extrapolated into the distant future. ....

2. A blind faith in the competence of the authorities is another typical feature of a classic mania. In the 1920s, investors believed that the recently established Federal Reserve had brought an end to �boom and bust.� A similar argument was trotted out in the mid-1990s when it was widely believed that the Greenspan Fed had succeeded in taming the business cycle. The �New Paradigm� disappeared in the bear market of the new millennium. It was soon replaced with the �Great Moderation� thesis of Ben Bernanke, which suggested that high levels of mortgage debt made sense because monetary policymaking was so vastly improved. ...

3. A general increase in investment is another leading indicator of financial distress. Capital is generally misspent during periods of euphoria. Only during the bust does the extent of the misallocation become clear. As the nineteenth century economist John Mills observed: �Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal in hopelessly unproductive works.� ...

4. Great booms are invariably accompanied by a surge in corruption. ...

5. Strong growth in the money supply is another robust leading indicator of financial fragility. Easy money lies behind all great episodes of speculation from the Tulip Mania of the 1630s � which was funded with IOUs � onward. ...

6. Fixed currency regimes often produce inappropriately low interest rates, which are liable to feed booms and end in busts. This lesson was ignored by the creators
of the European Monetary Union, which brought low rates and real estate booms to its smaller members, Spain and Ireland. ....

7. Crises generally follow a period of rampant credit growth. In the boom, liabilities are contracted that cannot subsequently be repaid. ...

8. Moral hazard is another common feature of great speculative manias. Credit booms are often taken to extremes due to a prevailing belief that the authorities won�t let bad things happen to the financial system. ...

9. A rising stock of debt is not the only cause for concern. The economist Hyman Minsky observed that during periods of prosperity, financial structures become
precarious. Investments financed with borrowed money don�t generate enough income to either service or repay the loan (what Minsky called �Ponzi finance�). ...

10. Dodgy loans are generally secured against collateral, most commonly real estate. Thus, a combination of strong credit growth and rapidly rising property prices are a reliable leading indicator of very painful busts. ...

The GMO article looks at each of the above points through the eyes of China.

1. The China Dream. For centuries, foreigners have pondered how to make money from China�s vast population. Today, the China Dream is more vivid than ever. The People�s Republic has more than 1.3 billion citizens, making it the world�s most populous nation. China�s rural population is gradually moving into its cities. A further 300 million country-dwellers � that�s roughly the same size as the U.S. population � are expected to head toward towns and cities over the next decade. It is generally assumed that the Chinese economy will continue to grow by around 8% annually in the coming years. ...

2.In the Communist Party of China We Trust.

Twenty years ago, it was argued that �Japan is different� and that Tokyo�s economic policies were better than the West�s. A number of best-selling books lauded the land of the rising sun. One bore the infamous title, Japan as Number One.

Today, similar claims are made about the singularity of the Chinese economy and the superiority of Beijing�s policies. And similar expectations are entertained about China�s inexorable march to economic primacy.

3. Investment Boom. In a market-oriented economy, investment might be expected to fall during a period of uncertainty and economic turbulence. Yet in 2009, Chinese fixed asset investment climbed by 30% and contributed 90% of last year�s economic growth. Investment rose to a record 58% of GDP. These are remarkable figures. The key question is: how well was this money spent? ....

4. Corruption. All great speculative manias have been accompanied by rising levels of fraud. Only in the bust do we get to see the full extent of the �bezzle,� as the Enrons, WorldComs, and Madoffs come to light. The upturn in China�s property and infrastructure spending, however, provides a cyclical spur to malfeasance. The People�s Republic recently slipped to 79th place in Transparency International�s 2009 Corruption Perceptions Index, just below Burkina Faso. ....

5. Easy Money. Nobel laureate Friedrich Hayek differed from his great rival J.M. Keynes. While the latter argued that bubbles were the result of turbulent �animal spirits,� Hayek claimed that asset price inflation followed from excessively low interest rates. Easy money, said Hayek, fed through to monetary and credit expansion, leading to inflation, either in the general price level or in asset prices. ...

6. The Fixed Exchange Rate and Capital Inflows. The Chinese currency, the renminbi, is pegged to the U.S. dollar. An undervalued exchange rate has boosted exports and kept interest rates low. It has also encouraged massive capital inflows, mostly in the form of foreign direct investment. Capital controls have limited inflows of hot money, although speculative inflows have picked up recently. ...

7. The Credit Boom. In response to the global financial crisis and the collapse of export orders, Beijing ordered its banks to go out and lend. Last year, new bank lending increased by nearly RMB 10 trillion, a sum equivalent to 29% of GDP. These loans largely went to fund infrastructure projects, property developments, and state-owned enterprises in a number of industries. It was as if the economy had received an enormous adrenaline shot. What most analysts fail to consider is the hangover that generally follows a credit binge.



8. Moral Hazard. The major Chinese banks are controlled by the state. They have a history of poor lending decisions. ...

9. Risky Lending Practices. .... No one can gauge the robustness of the credit system since Chinese banks appear particularly reluctant to report problematic loans. Ernst & Young published a 2006 report that estimated non-performing loans (NPLs) at $900 billion. This report was subsequently withdrawn. NPLs continued to decline in 2008 even as the stock market imploded and exports crashed. Fitch has suggested Chinese banks have been rolling over, or �ever-greening,� problematic loans. Bank employees have their own reasons for burying bad loans. A loan officer who reports problem debts is liable to have his salary reduced to below that of a migrant worker. Few seem to care about the practice of concealing nonperforming loans since it�s generally assumed that so long as the economy continues growing quickly, bad credits will turn good over time.

10. The Bubble. Surging credit has revived the animal spirits of Chinese investors. The Shanghai stock market recovered sharply in the first half of last year. On a single day in late July, turnover of �A-shares� in Shanghai exceeded the combined trading of the New York, London, and Tokyo stock exchanges. Chinese IPOs accounted for nearly two-thirds of global issuance by market value in the third quarter of last year. Chinese companies accounted for seven of the ten largest IPOs in the world. New issues were often massively oversubscribed and saw huge first day �pops.�

The Field of Dreams

Three years ago, Premier Wen described China�s economy as �unstable, unbalanced, uncoordinated and unsustainable.� The Great Recession hasn�t cured these imbalances. Rather, China�s ensuing investment and credit booms exacerbated them. The real estate market displays the classic symptoms of a bubble � stretched valuations, rampant speculation, and frenzied new construction. Sooner or later, this
bubble will burst.

In the past, whenever an economy has exhibited the 10 red flags listed in this paper there has been an unpleasant outcome. Forecasting the end game is no easy task since speculative bubbles can run to extremes. It�s made more difficult in this case by the fact that China is not a pure market economy. Stateowned enterprises can be called upon to prop up markets. Losses may be concealed or shuffled around like a shell game, as has happened in the past. Such measures, however, won�t cure China�s problems. They only delay the d�nouement. ...

There is much more in the article worth reading. Investigative minds will want to take a closer look.

Global Imbalances

In case you missed them, please consider the following articles on the ever growing global imbalances...

Spain, UK, Japan, Greece: Eurozone Structural Problems; Spain's Economic Woes; Pain In Britain; Deflation Persists In Japan

US, Canada: California USA vs. Ontario Canada - Which State (Province) Is In Worse Shape? Canadian Banks vs. US Banks Comparison

Australia: Money Madness In Oz

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Pritzker Musing

It's virtually impossible to write about The Pritzker Architecture Prize without discussing what other people are saying about the newest recipient. Coverage is fast and furious (see yesterday's ArchNewsNow for a few links and Google News for many more), and questions of "are they worthy" seem to take precedence over other concerns. This year's winners, Kazuyo Sejima and Ryue Nishizawa (aka SANAA), are known for minimal, ethereal designs of glass, metal and concrete. This fact is seen by James S. Russell (Bloomberg) as a disservice "at a time of profound challenges in the field." That they are the second duo (after Herzog & de Meuron) and Sejima is the second woman (after Zaha Hadid) to win the coveted prize is mentioned in just about all coverage (Cityscapes), and Christopher Hawthorne (LA Times) focuses on the former. While he quotes how the jury believes "it is virtually impossible to untangle which individual is responsible for what aspect of a particular project," there is one thing missing from this and other coverage: the individual practices of Sejima and Nishizawa that exist alongside SANAA.

The collaborative aspect of SANAA that Hawthorne and the jury praises is certainly nothing new, but that each retains their own individual practice is very unique. Many partnerships splinter as two or more designers and their egos do battle. Thom Mayne received the prize in 2005, but for a long time Morphosis was him and Michael Rotondi, who formed ROTO Architects in 1995. It's cliche but oftentimes true to say that a firm does not have room for more than one great designer. I think SANAA manage by allowing their own practices to exist and be treated equally; SANAA does not take precedence over the others, even though the commissions may get more press. But what is also important about this three-part structure, and is something that makes their choice for the Pritzker a little more complicated, is how the projects of each practice are not so easily distinguishable from the others. To be sure SANAA's commissions tend to be larger, but the minimalism, pristine surfaces and complex spaces are present in all their output. The award is given to Sejima and Nishizawa, but it can also be seen as a validation of all their work, whichever name gets the formal credit.

Previous Sejima/Nishizawa/SANAA coverage on my web pages:

:: Dior Building (Sejima)
:: Moriyama House (Nishizawa)
:: New Museum of Contemporary Art (SANAA, building)
:: New Museum of Contemporary Art (SANAA, project)
:: Onishi Hall (Sejima)
:: Rolex Learning Center (SANAA)
:: SANAA Houses (Sejima, Nishizawa, SANAA)
:: SHIFT: SANAA and the New Museum (SANAA)

03-31 Correction: Christopher Hawthorne does indeed mention the separate practices of Sejima and Nishizawa: "Both continue to operate their own smaller, separate firms."

Sanyo VPC-CA9 - World's First HD Waterproof Video Camera

Recently, Sanyo has launched a handy cam -- VPC-CA9, a dual camera that offers a simple style behind the extraordinary design. Its design reminds out a hair-blower, which makes it very relaxed to use. The button functions are easy to figure out without going through the manual. This device captures 9 MP photos which gives the outcome of a dedicated digital camera.

Apart from these features, it also sports 30x optical zoom, high speed sequential shooting function and the 2.5? LCD monitor. In an overall view, thisSanyo VPC CA9 camcorder is perfect for activities on the go, unconcerned about environments.

Eurozone Structural Problems; Spain's Economic Woes; Pain In Britain; Deflation Persists In Japan

Edward Hugh at Euro Watch is asking From A Greek Debt Crisis To A Eurozone Structural One?

When we look back five years from now, will we see this week as marking a turning point in the short, but far from uneventful, ten year history of Europe�s common currency?

Simon Derrick, chief currency strategist at Bank of New York Mellon even went so far as to say the trauma of recent days might well signal the point that we stop talking about a �Greek debt crisis� and start talking about a �Eurozone structural crisis� .

Basically it is important to recognise that the current crisis has placed the spotlight on the severe institutional weaknesses which lie underpin the common currency, and it is just these weaknesses which are leading so many commentators to now ask themselves whether it might not have been easier to implement political union in Europe before embarking on such an ambitious monetary experiment.

These weaknesses became even more clear on Thursday when Jean Claude Trichet went very public in making clear that he personally is totally opposed to IMF participation in any Greece "rescue".

The Economist magazine have done their own calculation on this, and they estimate that a loan of �75 billion rather than the currently rumoured �25 billion will be needed and that the country is likely to need five years (rather than three) to get its deficit down below 3% of GDP. They also assume that Greek GDP will be 5% below its current level by 2014. Obviously the output you get in these sort of calculations rather depend on the expectations you put in, but these are not unrealistic expectations.

The bottom line is that there is no easy answer here, and Europe is struggling to convince the rest of the world that it has both the will and the instruments to effectively tackle the problem of maintaining a single currency in a diverse group of countries. Herman Van Rompuy said on Friday there was no danger of Portugal being sucked into the same sort of debt whirlpool as Greece, and that Portugal would not be the next country to be sent over to Washington in search of a helping technical hand from the IMF. Which raises the question: if it won't be Portugal, who will it be?

Spain's Economic Woes

The Economist is discussing Spain and The Ma�ana Syndrome

The list of things that need repair is extensive. Spain�s structural faults were long hidden by a housing bubble and have been glaringly exposed now that it has burst. From unemployment and low productivity growth, and from troubled savings banks to creaky public finances, the problems are piling up. With the government unwilling to apply radical surgery, there are fears that Spain will fall further behind its neighbours. �The risk is that we will have a lost decade, like Portugal or Japan,� says Lorenzo Bernaldo de Quir�s, an economist at Freemarket International Consulting in Madrid.

Unemployment tops most people�s worries. Faster growth is needed to bring it down. Yet Spain has been in recession for seven quarters; the government expects GDP to shrink again this year; and the IMF forecasts growth of less than 1% in 2011.

The public finances must also be fixed. Last year�s deficit ballooned to over 11% of GDP. In January Elena Salgado, the finance minister, produced an outline of austerity measures that calmed market fears about Spanish debt. But two months later the plan still lacks detail�and has an obvious flaw. An optimistic Ms Salgado predicted growth of 3% in both 2012 and 2013, bringing added revenues to cut the deficit. Spain�s European commissioner, Joaqu�n Almunia, has warned against the sin of over-optimism. Growth will not go over 2% until 2014, says �ngel Laborda, an economist at FUNCAS, the savings banks� foundation. He reckons that more tax rises and spending cuts are inevitable if the government is to hit its 3% deficit target by 2013.

The Bank of Spain�s governor, Miguel �ngel Fern�ndez Ord��ez, is calling for reform of a rigid labour market that makes most employees too costly to fire but condemns a third of workers to unstable, unprotected temporary jobs. Yet the government has repeatedly delayed pension and labour reforms. Mr Zapatero�s great goal is to conserve social peace. That means keeping trade unions happy, even if reforms (and growth) have to wait.

Some detect a whiff of cowardice. Mr Zapatero�s determination to avoid general strikes is proof that he will never take a difficult decision, says Artur Mas, head of the Catalan Convergence and Union coalition. And because broad agreements on public-spending cuts lack detail, they also lack urgency.

The delay in sorting out the cajas adds to the sense of drift. Most Spaniards do not see the economy improving any time soon. Faith in the political class is at rock bottom. The Spanish now rate politicians as a bigger problem than their old bugbear, terrorism. Mr Zapatero�s Socialists are trailing in the polls�but an election is not due for two more years.

UK Pain To Come

The British Economy has Pain To Come.

As Britain prepares to go to the polls, its sick economy is uppermost in voters� minds. With good reason. There are fundamental doubts that it can ever recover fully from a banking crisis and recession that laid Britain lower than many other rich countries. In the short term, the worry is whether a feeble recovery reliant on fiscal and monetary life-support can develop its own driving force.

The economy shrank by 5% last year, the biggest fall since the Great Depression. The contraction over the six quarters of the recession was 6.2%. That peak-to-trough decline was less severe than in Japan, Germany and Italy, but the recession lasted longer than in any other G7 economy.

The public finances look even worse. Not only is the budget deficit the highest, as a proportion of GDP, since the second world war, but this year�s will be the biggest of any G7 (and even G20) economy, according to the IMF. The build-up in government debt between 2007 and 2014 will be second only to Japan�s (see chart 1).



Recent disappointing export performance has dimmed hopes that Britain can trade its way out of the quagmire.

As one reverse has followed another, Britain�s economic reputation has nosedived. So has sterling. Its trade-weighted value has fallen by around a quarter since mid-2007, a bigger decline even than after the pound was turfed out of the European exchange-rate mechanism in 1992. For some, Britain now vies with the distressed likes of Greece and Spain for the title of sick man of Europe.

There is also more than a passing resemblance to Japan, which never regained its economic stride after its banking crisis of the 1990s. Could Britain now follow suit, given that its financial system came so close to collapse in October 2008? Those inclined to think so find worrying confirmation in a report by McKinsey, a management consultancy, which shows that total indebtedness in the British economy was the highest as a share of GDP among ten advanced countries in 2008, narrowly beating Japan�s.

Britain�s political economy is on trial as much as its economy. The government is currently spending four pounds for every three it receives in revenues. This reflects not just the severity of the recession but misjudgments during the good years. It was a mistake to be borrowing at all, let alone over 2% of GDP, in 2006 and 2007 when the economy was strong. Moreover, that deficit would have been even higher but for inflated receipts from ebullient property markets and financial firms.

Mr Darling�s budget is the last breath of a dying government. What will really count is the first one of the next parliament. That budget will have to do what the chancellor failed to do: set out a credible plan for reducing the deficit, grounded in sober rather than wishful forecasts for growth, decide where spending cuts will actually be made, and also�in all probability�announce additional tax increases.

The country�s economic future may be less dazzling than before but that glitter turned out to be fool�s gold. After those excesses, a period of private sobriety and public austerity may prove to be no bad thing.

There is much more to see in Economist articles on Spain and the UK. Please give them a look.

Deflation Persists In Japan

Bloomberg is reporting Japan Deflation Persists as Consumer Prices Fall 1.2%

Japan�s consumer prices fell for a 12th month in February, adding pressure on the central bank to eradicate deflation that is hampering the economic recovery.

Prices excluding fresh food slid 1.2 percent from a year earlier, after dropping a 1.3 percent in each of the preceding two months, the statistics bureau said today in Tokyo.

Finance Minister Naoto Kan said the report shows more efforts are needed to overcome deflation even as price declines ease.

Because of Japan�s record public debt, �the scope for fiscal stimulus is very, very limited to non-existent, but there�s probably more scope on the monetary side,� said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC, a unit of Prudential Financial Inc., which manages $667 billion. BOJ liquidity injections will support the economy and stock market even as deflation persists, he said on Bloomberg Television.

What does Japan have to show for two years of fighting deflation?

This:



With credit once again to the Economist.

Japan's 2014 estimated 246% ratio of debt to GDP exceeds every other G7 country by a mile.

Take a look at the problems in Spain, Japan, Greece, Italy, and the UK. Even Canada does not look so hot as noted in California USA vs. Ontario Canada - Which State (Province) Is In Worse Shape?

Moreover, Canada, Australia, the UK, and China all have huge property bubbles that have yet to pop, but they will.

The US is certainly not alone in fiscal problems. Indeed, global imbalances mount as governments all over the globe sing the praises of the nascent recovery. Unfortunately there is no recovery, only a mirage of ever mounting debt.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

A cozy window nook!

First of all, thanks so much for your idea on the furniture layout! It�s hard to get a feel for the room just with the pics I posted � there are walkways behind both sofas, so for now, they have to stay put. But I am going to add a console table behind the long sofa for sure � I found a perfect table that isn�t too deep and it�s gorg! But for now I�m trying not to spend any cash. ;)

One of the first changes I made to the Bub�s room was his window �  it looked like this for quite some time:

I�ve gone back and forth for years now about adding a built in window seat in this spot. Some day I think we will, but for now, I needed a spot to put the rocking chair. The addition of a big boy bed made for little room for it. It fit perfectly into this little area -- so I decided to make a little �reading nook.�

Then it was time to address the window. I�ve slowly but surely been replacing all of our two inch blinds with bamboo roman shades (LURVE) and that was the first step:

I loved the shutters (found at an antique store) but with the move to a big boy room, they just felt too �nursery� to me. Or maybe I was just tired of them. I�ll go with the former. ;)

I played with a few ideas in my head. One was to make shutters like I did for the windows on our deck and hang them to each side of the window. I loved that idea, but I also had plans to add more light to this spot. It was going to look odd having the light sconces I had in mind installed on top of the shutters.

I wanted it to be light and airy feeling � and then I remembered the white muslin fabric I had bought for another project. I had a ton of it (I need to get more now for the other project, then I�ll share that one!), and it was only $1.99 a yard, and 40 percent off of that.

Score!

It was perfect!:I found the swing arm sconces at Home Depot ($30-something each?) and they were EXACTLY what I was looking for! Squeal! They are so gorg. And they even had drum shades, with a yummy basket weave-like fabric. (Just like the wallpaper I used in this space!)

I still wanted to add a little something to the white drapes, so I decided to use extra fabric from his headboard project (coming soon). I started by hemming up the ends of the muslin with my iron and hemming tape:

Then I made panels of the accent fabric, hemming the edges with the no-sew tape:

And then I just ironed the panel to the muslin:

I rarely ever sew drapes � I always use hemming tape! I cannot stress how easy it is to use! I always buy the super weight and it holds up great � for years and years and years. You can even wash items you use it on. I buy mine everywhere � Joann�s, Hobby Lobby, I think even Walmart has it?

This project would probably have been faster with a sewing machine � but by the time I get my little machine out and then try to sew a straight line, I�d rather just use hemming tape. ;)

Now the little touch of navy blue really grounds the drapes, both literally and figuratively:

The extra fabric at the bottom helps to make them a bit more substantial and they hang much better now.

I planned to make the panels a little thicker than they are, but I didn�t have enough fabric. They ended up being eight inches tall:

I love love LOVE how they look next to the built ins:

Wooeee, I am in love with this navy and white combo! Classic.

Each sconce takes a 75 watt bulb, so it adds a TON of light:

The sconces are on the wall behind the fabric � and to make it so the arms came through the fabric, I separated the panels of muslin � one slightly thinner panel on the left, one wider on the right. So the arm of the sconce comes right through the fabric:

      

I can still close the wider section when I want, so they are operational.

I�m thinking about adding a cornice at the top, but I�m a little wary that it will get too busy, so I�m holding off for now.

I am so thrilled with the transformation! Before:

After!:

I especially love this area at night! It�s so sweet to sit in this chair with the Bub � during the day, looking out on the land behind us. At night, reading, talking, just being.  :)

All in all this spot was in the cost of the sconces and the bamboo shades (from Lowe�s). The fabric I already had for other projects. It is one of the first things you see when you walk in, so I felt like it was worth it!

The room is coming along just as I saw it in my head. Lurve. Lots still to do in here � art, accessorizing, molding, painting, painting and more painting. :) I can�t wait to show you the rest!

P.S. You can see peeks to other parts of the room in these pics � I know I said before I was trying to avoid primary colors when I started thinking of the redo a year ago. The whole irony in all of this is that primary colors are all that are going in here! AND I love it! :)