Category: Current Affairs

Ticket to Ride (Taxes in Everything)

BERLIN (Reuters) – Germany’s first “sex tax meters,” from which prostitutes can purchase a ticket for 6 euros (5.31 pounds) per night, will ensure the tax system is fairly implemented, a city spokeswoman said.

“Inspectors will monitor compliance — not every evening but frequently,” the spokeswoman told Reuters.

If caught without a valid ticket, offenders will first be reprimanded, then face fines and later even a ban.

Hat tip Daniel Lippman.

China-Icelandic markets in everything

I’ve been waiting for a story like this.  If I were a Chinese tycoon, this is exactly what I would buy:

A Chinese tycoon plans to buy a vast tract of Icelandic land for a $100m tourism project which critics fear could give Beijing a strategic foothold in the North Atlantic.

Huang Nubo, a real estate investor and former Chinese government official, has struck a provisional deal to acquire 300 square kilometres of wilderness in north-east Iceland where he plans to build an eco-tourism resort and golf course.

Opponents have questioned why such a large amount of land – equal to about 0.3 per cent of Iceland’s total area – is needed to build a hotel. They warned that the project could provide cover for China’s geopolitical interests in the Atlantic island nation and Nato member.

While home to just 320,000 people, Iceland occupies a strategically important location between Europe and North America and has been touted as a potential hub for Asian cargo should climate change open Arctic waters to shipping.

Mr. Huang is ranked as China’s 161st richest man and he considers himself a poet and an adventurer.

Doesn’t anyone want my money?

Deposits are flooding into the biggest U.S. banks as customers seek shelter from Europe’s debt crisis and falling stock prices. That forces lenders to raise capital for a growing balance sheet and saddles them with the higher deposit insurance payments. With short-term interest rates so low, it’s hard for financial firms to reinvest the new money profitably.

Regulators have asked banks to take the deposits anyway, three people said, with one lender accepting $100 billion. The regulators want lenders to take the deposits because it improves the stability of the financial system, according to one of the people, who said U.S. banks are viewed as places of strength.

The banks are taking the assets but asking that the associated capital requirements and deposit insurance fees somehow be relaxed or waived.  The article is here.

If you are wondering, I do consider this partial evidence for a liquidity trap.  But I request consistency.  If this is evidence for a liquidity trap, the absence of this development in prior periods has to count as evidence against the existence of a liquidity trap.  Furthermore by no means is negative nominal interest on deposits the industry standard, far from it, except perhaps in Switzerland.  So we’re still not in a liquidity trap, if one has to give a simple yes or no answer.  T-Bills aside, there are plenty of margins at which money holding decisions follow intuitive economic principles.

Claims about North Dakota

If you have a license and no criminal record, you can get a six-figure trucking job almost overnight.

The article is here, hat tip goes to Garett Jones on Twitter.  If your response is: “How many of the unemployed could get work in North Dakota?” you have missed the point.

You can find some of the ads here, and more broadly here.  My poking around showed that some of them start at 75k a year, though with raises for good performance.  It is also required that you have no DUI convictions.  The sense of community is strong and the State Capitol is an Art Deco masterpiece.  You can get Canadian TV.  What more could anyone want?

Greece fact of the day (not much of a bailout sir, is it?)

The uncertainty caused by the deal has led Greek bonds to plummet in recent days, with yields on Greece’s benchmark 10-year bonds breaching 18.5 per cent on Thursday, a new euro-era high, wiping away all gains achieved after the bail-out deal was reached.

There is more interesting information at the link, which is about whether there will be a bailout deal at all.

The silent run on European banks, update

Separately, bankers estimate that Italian banks lost the equivalent of €40bn-worth of money market funding in July. And while money market funds are still lending to French banks, the duration of deals has shrivelled dramatically, from several months to just a few weeks (at most). This matters, since French banks rely on money markets for about €200bn of funding.

Now, the good news is that these raw numbers are small compared to the total volume of money that eurozone banks raise in the wholesale and interbank markets, which is around €8,000bn. Better still, the European Central Bank has stepped into the gap to replace those vanishing funds. That has kept the system running, even as funding costs for eurozone banks have exploded to a level which are “massively prohibitive” – and thus unsustainable – for most banks, as Suki Mann, analyst at Société Générale says.

Here is the article.  The “Better still” sounds funny to my ears, but I think you get the point.  I’ve been saying for quite a while that this is the mechanism which will do in the (current configuration of the) euro, I suppose we will see.

Toward a theory of autocracy

The Russian head of the World Chess Federation said he spoke Tuesday with Libyan leader Moammar Gadhafi and that he remains in Tripoli and defiant.

Kirsan Ilyumzhinov has known Gadhafi for years. His visit to Tripoli in July was among the last times the Libyan leader was seen in public after NATO airstrikes began.

…He said Gadhafi sounded full of vigor and told him he was “certain we will win.”

Ilyunzhinov said he also talked to Gadhafi’s son Mohammed, Libya’s Olympic chief, who said his father’s forces would “drive the rats out of
the city.”

The link is here, via @JamesCrabtree and Natasha.  Of course I also could have titled this post “Toward a theory of the World Chess Federation.”

Ireland ten-year bond rates

Link here, CDS spreads are down too, and that happened during a period when the euro crisis got much worse overall.  Don’t get me wrong, there is still plenty wrong with the Irish economy, most of all the need to cough up many years of illusory gains and re-plan accordingly.  I’m just pointing out that not many of the classic Keynesians predicted this outcome, to say the least.

I thank TallDave for a related pointer.

Facts about Ireland

Yet despite cutbacks and tax rises, the country still chalked up a 1.3 per cent expansion in gross domestic product in the first three months of this year.

There is more here, and also here, maybe best of all is here.  Mind you, this is not a stunning performance.  Nor can we expect it to continue, if the eurozone and America are headed for broader troubles, as indeed appears to be the case.  Nonetheless it’s a result which most Keynesian theories very strongly predicted against.  Ireland also achieved this during a weak time for its major trading partners.  Since the crisis started, Ireland’s cumulative adjustment has been about thirteen percent of gdp and now they are growing again.  Yet we are not hearing a peep about this.

Washing Away Sin

Attendees at a nationalist, right-wing concert in Germany were duped into wearing souvenir T-shirts…the t-shirts originally read “hardcore rebels” and sported a skull and nationalist flags. However, once the garment had been washed, the shirt revealed a new message:

“If your t-shirt can do it, you can do it too — we’ll help you get away from right-wing extremism.”

Awesome.

Hat tip: Jeffrey Goldberg at The Atlantic.

Life mirrors…?

An Australian investment banker accused in his home country of locking a fake bomb to a teenager’s neck was ordered jailed Tuesday in Louisville, Ky., pending an extradition hearing.

Paul Douglas Peters’ appearance in federal court followed his arrest by the Federal Bureau of Investigation Monday at his ex-wife’s home outside Louisville. It culminated a chase across two continents, from an exclusive Sydney suburb where Mr. Peters, nattily garbed but wearing a balaclava helmet, allegedly fastened a black box around 18-year-old Madeleine Pulver’s neck on Aug. 3, to Debra Peters’ home in a quiet upscale neighborhood.

Here is more.

Why did Texas create so many jobs?

Advance warning: this is not a post about Rick Perry!

Matt Yglesias writes:

My view is that Texas’ robust job growth is a consequence of its robust population growth

This is consistent with Paul Krugman’s column yesterday, and also consistent with Matt’s earlier writings praising Texas for not overdoing the zoning.  I agree, but I wonder who should be reassured by this answer.

I’ve read a lot of blog posts lately painting Texas as a low benefit, low Medicaid, not so great system of public education kind of state.  Let’s take this picture and run with it.  People are moving into the state, in fairly large numbers, and that suggests the state is doing something right (again, I’m not suggesting Perry has anything to do with this.)  By the way, Dallas-Fort Worth recently had 35 straight days of 100+ weather and that wasn’t even a record for the region.

I see four options:

1. Hispanics track other Hispanics to some extent, so if Hispanic population is going up, so is the population of Texas.  For sure, but this is by no means the entire population phenomenon.  Nor is New Mexico experiencing a comparably positive mobility effect.

2. Texas gets some policies right, some say low taxes, there is lots of debate here.  Sometimes conservative commentators argue that “being tough on the poor” is in fact good for the poor themselves, given “poor on poor” local externalities.

3. Texas gets right a lower-zoning policy, which leads to cheap rents.

4. People are moving to Texas because fossil fuel prices have been rising.  There’s something to that, but still those prices do not seem to predict employment in Texas, at least not in recent times.

Let’s treat #1 and #4 as exogenous to policy, for the sake of argument dismiss #2 altogether, and thus focus only on #3.  Is this a result progressives should feel happy about?

I am not sure.  There is no chance of Texas’s looser zoning being applied to Fairfax County; for one reason the “Mantua moms” (don’t ask) wouldn’t stand for it.  It’s not even an issue and it doesn’t matter which party is in power.  Those are the same Mantua moms who oversee and enforce one of the nation’s best public school systems.  Now, as a general matter, should the influence of the Mantua moms be stronger or weaker?

Well, we’ve decided to live with the Mantua moms, for better or worse.  The neighborhood is splendid, but boring, and the neighbors do not support good food.  Texas, it seems, doesn’t give nearly as much political power to its equivalent of the Mantua moms, for whatever reason (can anyone tell us why?).  That leads to cheaper land, cheaper housing, and inferior public school systems, not to mention better and cheaper food.  And poor people are voting with their feet to choose it.

I am well aware that marginal migrants do not necessarily reflect the preferences of the infra-marginals.  Still, I am not sure many of us should find this a comforting scenario.

I’m not sure that “don’t choose policies, choose interest groups” counts as a final truth, but it’s an interesting thought experiment to upset the usual ideological applecarts.