July 11, 2011

The Euro: who’ll be the first to leave?

Filed under: Economics, Europe, Government — Tags: , , , , — Nicholas @ 11:15

With all eyes on Greece recently, the troubles of Italy come as a sudden shock to many:

Greece, Ireland, Portugal, (maybe) Spain…and now Italy? Contagion. The hope on the part of the EU and ECB was to contain the contagion by throwing money at it, but every time they fill one sink-hole with Euros another one opens up. It’s been obvious for a long time that the Eurozone was simply a bad idea, and this crisis has exposed the rotten underpinnings for all to see. Europe wanted to have a currency union just like the United States, but they are finding out the hard way that a monetary union without a fiscal-policy union just won’t work. European countries are not like US states — they have different langauges, different work rules, different governing philosophies…different cultures. The big question in everyone’s mind is…now what? Some countries must default, and a default will probably require leaving the Euro and going back to the sovereign currency. But no one knows exactly how this will work, or what the consequences will be.

Some people are floating the idea of a Euro-Bond, but I find that a little nonsensical absent any fiscal-policy union backing it. But of course this may be the point to the enterprise: to “force” Europeans into a closer union without having to go through the messy (and time-consuming) processes of holding a vote. The EU project has never really been a democratic enterprise from the very first — the Eurozone was implemented without the say-so (even over the protests of) its citizens. If I Eurobond is floated, I expect it to be another example of droit de Seigneur on the part of the Eurozone elite. (And it probably won’t work, and will piss away a lot more good money after bad, but none of that has stopped them so far.)

US economic slowdown and the impact on Canadian exports

Filed under: Cancon, Economics, USA — Tags: — Nicholas @ 10:04

Over at the Globe and Mail, Stephen Gordon debunks the old saw “When the U.S. sneezes, Canada catches cold”:

About 30 per cent of Canadian output is exported, and roughly 75 per cent of exports go to the U.S., which means that some 20-25 per cent of Canadian GDP is exported to the United States. If U.S. demand for Canadian exports were proportional to U.S. income, a 1 per cent decline in U.S. GDP would show up as a 0.2-0.25 per cent decline in Canadian output. (See also here, where I estimate that everything else held constant, a 1 per cent decline in U.S. GDP produces a 0.3 per cent decline in Canadian GDP).

But of course, everything else isn’t held constant when the U.S. goes into recession. For reasons that are not immediately obvious to me, the forex market’s response to a U.S. recession is to produce an appreciation in the U.S. dollar against ours. The resulting depreciation in the Canadian dollar has the effect of increasing net exports. In each of the last three recessions, net exports have provided a positive contribution to Canadian GDP growth.

Can the government force you to provide your password?

Filed under: Government, Law, Liberty, Technology, USA — Tags: , , , , — Nicholas @ 09:37

Declan McCullagh discusses a potentially precedent-setting case in Colorado that may determine whether the 5th amendment applies to your personal passwords:

The Colorado prosecution of a woman accused of a mortgage scam will test whether the government can punish you for refusing to disclose your encryption passphrase.

The Obama administration has asked a federal judge to order the defendant, Ramona Fricosu, to decrypt an encrypted laptop that police found in her bedroom during a raid of her home.

Because Fricosu has opposed the proposal, this could turn into a precedent-setting case. No U.S. appeals court appears to have ruled on whether such an order would be legal or not under the U.S. Constitution’s Fifth Amendment, which broadly protects Americans’ right to remain silent.

I’d hope that the protections against self-incrimination would apply in this case, but government power has been expended so far in the last ten years that it would not surprise me if the courts gut this right in their deference to the executive (just like every other time, it seems).

The long, quiet development of weaponry

Filed under: History, Military, Technology — Tags: , , — Nicholas @ 09:20

Strategy Page titled this one as “Four Decades To Become An Overnight Sensation”:

Wonder weapons, in general, aren’t. Those spiffy and seemingly magical new “wonder weapons” tend to be old weapons designs that finally got to the point where they lived up to the original hype. Take smart bombs. They were invented, and used quite successfully, during World War II. But these were radio controlled, and required skilled operators to succeed. Expensive as well, and no one wanted to spend the money to train effective operators in peacetime. In wartime, price was no object, and experience was easy to get.

Thus the U.S. dropped smart bombs from their arsenal after World War II, and didn’t revive them until the 1960s, when lasers (developed a decade earlier) were used to bounce their light off a target. A bomb was equipped with a seeker that could home on the reflected laser light, and a guidance kit (battery and motors to operate small wings) to hit the target without an operator. This was cheaper and more effective than the earlier smart bombs. The next big jump, in the 1990s, was the GPS guided bomb, which finally perfected the smart bomb. Thus this wonder weapon took four decades to become an overnight sensation.

Other examples are helicopters, which became iconic of the Vietnam War: first flown in 1904, used sparingly by both sides in World War II, but not in wide use until the 1950s.

While many of these systems are called “wonder weapons,” they aren’t. That’s because every new weapon quickly produces new tactics and combat techniques that reduce the improved capabilities of the new weapons. This is often ignored by historians. Self-preservation is a great motivator, and in the face of new weapons, the enemy will quickly find ways to diminish the wonder.

The highly localized outrage in the News of the World affair

Filed under: Britain, Media — Tags: , , — Nicholas @ 09:09

Frank Furedi points out the amazingly restricted view of the media:

The furore that surrounds the demise of the News of the World has little to do with the specific morally corrupt practices at that tabloid. Rather, as with other highly stylised outbursts of outrage in recent years — from ‘cash for questions’ to the MPs’ expenses scandal to bankers’ bonuses — this is a media-constructed and media-led furore. The main reason the sordid phone-hacking affair has become the mother of all scandals is because the media assume that anything which affects them is far more important than the troubles facing normal human beings.

It’s understandable: media folks frequently point out that politicians and celebrities move in “bubbles” which rarely bring them into contact with ordinary people — yet only occasionally seem to be aware that the media lives in its own set of bubbles.

Outrage-mongering, which is essentially an accomplishment of the media, is parasitical on today’s depoliticised and disorganised public life. In the absence of true political conviction, of any meaningful political alternative, strongly held views have been replaced by expressions of frustration and outrage. In such circumstances, the cultural elite can substitute its own agenda for that of the public, and in effect an outraged media reality becomes the reality.

Over the past week, many have claimed that the News of the World’s phone-hacking practices have offended the British public. Time and again, journalists claim to have detected a powerful public revulsion against the machinations of News International. Even a sensible columnist like Matthew d’Ancona argues that ‘David Cameron and Rupert Murdoch are swept up in a public fit of morality’. In truth, this ‘public fit of morality’ is actually confined to a relatively narrow stratum of British society. People in the pub or on the streets are not having animated debates about the News of the World’s heinous behaviour. Rather it is the Twitterati and those most directly influenced by the cultural elite and its lifestyle and identity who are emotionally drawn to the anti-Murdoch crusade.

A need for speed in 1955 still has lingering influence

Filed under: History, Science, Technology, USA — Tags: , — Nicholas @ 09:01

Richard Black discusses the start of commercial nuclear power:

An experimental US reactor called EBR-1 generated the first nuclear electricity at its home in Argonne National Laboratory, sending current through a series of lightbulbs in 1951.

But the US did not open the world’s first civilian nuclear power station; that honour went to the USSR, whose tiny Obninsk reactor opened in 1953.

And the world’s first commercial-scale nuclear station was the UK’s Calder Hall, opened the following year.

The race for nuclear power — and with it, political influence — was underway.

“[Soviet President Nikita] Khrushchev… recognised that achievements in nuclear power made it possible to compete with the United States in the world arena — to say ‘our system, the socialist system, is the best — look who is first in areas of science and technology’,” relates Soviet historian Paul Josephson.

“You see a rebirth of hope that there will be a glorious communist future, perhaps a nuclear-powered future.”

All of these early reactors used different designs, with everyone except US scientists forced to work with natural uranium rather than the enriched variety developed during the Manhattan Project.

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