Minot Sees Record Flood

CBC:

Minot, the fourth-largest city in North Dakota, is about 90 kilometres south of the Canadian border, almost directly below the Manitoba-Saskatchewan boundary.
The Souris river and torrential rains feeding into it have also caused havoc across southeastern Saskatchewan, where a number of communities have declared states of emergency as they deal with flooded homes, businesses and crumbling roads.
In the coming days, the river through Minot is expected to expected to dwarf the major flood of 1969. That's when the Souris reached 474 metres above sea level. It's expected on the weekend to hit nearly 476 metres, surpassing even the historical record level of 475 metres, set in 1881.
"In two days' time, it will be a rapid, rapid rise," Gov. Jack Dalrymple said.
The 1969 flood prompted the Army Corps of Engineers to build a dike system that has been beefed up several times this spring.
But those levees are unable to handle flows from Saskatchewan of approximately 28,000 cubic feet per second.

It is stunning how much flooding there has been in the Dakotas this spring.  I don't know if it is caused by La Nina, but she's my expected culprit.

Naked Capitalism Link of the Day

Today's link: University of Minnesota engineering researchers discover source for generating 'green' energy, at e! Science News:

To create the material, the research team combined elements at the atomic level to create a new multiferroic alloy, Ni45Co5Mn40Sn10. Multiferroic materials combine unusual elastic, magnetic and electric properties. The alloy Ni45Co5Mn40Sn10 achieves multiferroism by undergoing a highly reversible phase transformation where one solid turns into another solid. During this phase transformation the alloy undergoes changes in its magnetic properties that are exploited in the energy conversion device.
During a small-scale demonstration in a University of Minnesota lab, the new material created by the researchers begins as a non-magnetic material, then suddenly becomes strongly magnetic when the temperature is raised a small amount. When this happens, the material absorbs heat and spontaneously produces electricity in a surrounding coil. Some of this heat energy is lost in a process called hysteresis. A critical discovery of the team is a systematic way to minimize hysteresis in phase transformations. The team's research was recently published in the first issue of the new scientific journal Advanced Energy Materials.

 Very interesting properties.  So an allow of nickel, cobalt manganese and tin can turn heat to electricity.  It almost sounds like John Galt's static electricity generator, except this is research done at a state university.  I doubt that this is the solution to all our problems, but it is pretty amazing.

More on "Job Killing" Government Spending

Andrew Samwick:

Why has the opposite view begun to take hold? In part, Samwick argued, it's thanks to the efforts of congressional Republicans, who want budget cuts and lately have hammered home the view that government spending has stymied growth. "You have the Speaker of the House talking about job-killing government spending," said Samwick, now a professor of economics at Dartmouth College. "But they have not been tasked with making clear exactly how the government is killing jobs."

If the conjecture means that employment goes up when government spending goes down, you would have to persuade me that a person is more likely to be employed if the government stops spending money to purchase things that he would make if employed.  That makes no sense.
If the conjecture means that employment goes up when there is a revenue-neutral reduction in government spending, then that could be true, depending on whether the government spending or the private spending that might occur with a lower tax burden is more labor-intensive.  But that hardly seems like the context for the question.  Alan Blinder provides a more articulate response to the conjecture in yesterday's Wall Street Journal.
I am not saying that any government spending is justified merely for the sake of employing labor and capital.  It is justified if it serves a need that society has and that the government is typically responsible for meeting.  In that case, the current economic environment is one in which the need could be met on the cheap, precisely because the costs of employing labor and capital are lower than they are likely to be in the future.  This is nothing new -- it is what I have been saying for nearly 3.5 years.

The Republican argument makes no sense, and yet, much of the country buys into it.  I don't know what they think happens to government spending, does it get put in a crate and sent to China?  If you want to look at spending that doesn't grow our economy, look at money spent on oil imports.  That money ends up in other countries and only gets recycled back through Treasury purchases.  In other words, that money goes to other countries, then returns to be used in the same government spending the Republicans say is job-killing.

Financial Players Threaten Democracy

Amartya Sen (h/t Mark Thoma):

Two distinct issues need to be separated. The first concerns the place of democratic priorities, including what Walter Bagehot and John Stuart Mill saw as the need for "governance by discussion". Suppose we accept that the powerful financial bosses have a realistic understanding of what needs to be done. This would strengthen the case for paying attention to their voices in a democratic dialogue. But that is not the same thing as allowing the international financial institutions and rating agencies the unilateral power to command democratically elected governments.

Second, it is quite hard to see that the sacrifices that the financial commanders have been demanding from precarious countries would deliver the ultimate viability of these countries and guarantee the continuation of the euro within an unreformed pattern of financial amalgamation and an unchanged membership of the euro club. The diagnosis of economic problems by rating agencies is not the voice of verity that they pretend. It is worth remembering that the record of rating agencies in certifying financial and business institutions preceding the 2008 economic crisis was so abysmal that the US Congress seriously debated whether they should be prosecuted.

Since much of Europe is now engaged in achieving quick reduction of public deficits through drastic reduction of public expenditure, it is crucial to scrutinise realistically what the likely impact of the chosen policies may be, both on people and the generating of public revenue through economic growth. The high morals of "sacrifice" do, of course, have an intoxicating effect. This is the philosophy of the "right" corset: "If madam is at all comfortable in it, then madam certainly needs a smaller size." However, if the demands of financial appropriateness are linked too mechanically to immediate cuts, the result could be the killing of the goose that lays the golden egg of economic growth.

This is an interesting perspective, and I think the run-on effects of austerity are going to be the opposite of what the pain caucus promises.  The case of Ireland, moreso than Greece, is one in which the financial players are getting private debt bailed out by the government and taxpayers.  At least in Greece it is the actual government which ran up the debts.  The Irish case is an even worse deal for the Irish people, and it is a disgrace that Tim Geithner used U.S. power to protect creditors from haircuts.  While the Eurozone is a special case, I think the creditors' insistence on being made whole is a joke.  Buying bonds comes with risks, taking haircuts is part of that risk-taking.  The power the IMF has, typically on developing countries, must be questioned.  It is a threat to democracy to give developed nations the power to order around developing countries, just so the developed countries banks don't lose money.

Chart of the Day

From Krugman:

Federal Reserve Forecast for Unemployment

I'll bet on the light blue section on the top side.  That is, if it doesn't start climbing back up.  Note that the worst prediction on the chart is still an improvement over the existing data.  I take it back, I think the top light blue section is an optimistic case.  We are screwed.

Whitey Bulger Finally Arrested

Kennebec Journal (AP):

Boston mob boss James "Whitey" Bulger was captured near Los Angeles after spending the last 16 years on the run during an epic manhunt that served as a major embarrassment to the FBI and made the fugitive a global sensation as he constantly found a way to elude authorities.


The FBI finally caught the 81-year-old Bulger Wednesday at a residence in Santa Monica along with his longtime girlfriend Catherine Greig, just days after the government launched a new publicity campaign to locate the fugitive mobster, said Steven Martinez, FBI's assistant director in charge in Los Angeles. The arrest was based on a tip from the campaign, he said.
The FBI had been conducting surveillance in the area where the arrest was made, said police Sgt. Rudy Flores, who gave no details of the arrest.
FBI agents swarmed around Bulger's building late Wednesday, hours after the arrests in a neighborhood of two and three-story apartment buildings.
Bulger lived on the third floor of The Princess Eugenia, a three-story, 28-unit building of one and two-bedroom apartments three blocks from a bluff that overlooks the Pacific Ocean. Neighbors said the couple did not stand out.
Barbara Gluck, who lives on the same floor as Bulger and Greig, said she didn't know their names but recognized them from photos on the Internet after she heard about their arrest.
Gluck described Greig as "sweet and lovely" and said they would have "girl talk" when they ran into each other in the building. Bulger became angry whenever he saw the two of them talking, and would say, "Stop talking to her," Gluck said.

16 years after being tipped off by the FBI agent working his case, Whitey Bulger is under arrest.  I can't say that spending your early retirement on the lam is in any way worse than being in prison, but I don't think he'll be able to avoid prison now unless he pulls off a jail break or commits suicide.  While the trial will bring into the media a lot of headlines embarrassing to the FBI, at least they finally found him, and can close a long, sordid chapter of FBI and Beantown history.

Ernie Shore's Unofficial Perfect Game

Ernie Shore

June 23, 1917:

Boston pitcher Babe Ruth started a game against the Washington Senators.
Ruth walked lead-off batter Ray Morgan, griping to plate umpire Brick Owens after each pitch.
On ball four, Ruth became so enraged that he punched Owens, in the face and was ejected.
Ruth is not fined, but draws a 10-day suspension.
Ernie Shore came in to replace Ruth. Morgan was caught trying to steal.
Then Shore retires all 26 men he faces in a 4-0 win.
Because he didn't start, his perfect game is not considered official.

From the SI archive:

Ernie Shore, a tall, lanky pitcher from North Carolina, made himself comfortable in the corner of the Red Sox dugout at Fenway Park in Boston. It promised to be a long, lazy afternoon for Shore—that afternoon of June 23, 1917. The Red Sox were playing the Washington Senators in a doubleheader, and Shore, who had pitched against the Yankees two days before, expected to watch both games from his cozy spot on the bench. The Red Sox pitchers were Babe Ruth and Dutch Leonard, and against Washington, then as now, it seemed certain they would be sufficient.
Ruth, starting the first game, walked Ray Morgan, Washington's lead-off hitter. Ruth had argued with Umpire Brick Owens on the ball three pitch and now he stalked off the mound toward the plate. Owens whipped off his mask and advanced to meet him, whereupon Ruth threw a looping right-hand punch. Some say the punch caught Owens on the jaw, others say the left ear but, in any event, both Ruth and his catcher, Chet Thomas, were thrown out of the game.
Black Jack Barry, the Red Sox manager and second baseman, spotted Shore in the corner of the dugout. "He asked me if I'd pitch until he could get someone else warmed up," Shore recalls. "In those days you were only allowed five practice pitches. Sam Agnew went in to catch."
On Shore's first pitch, Morgan tried to steal second. "It was a good move," says Shore. "Morgan figured I wouldn't be able to get much on the pitch and that Agnew wouldn't be ready. But Sam threw him out."
The next two batters hit the ball directly at Boston infielders, and Shore was out of the inning. "Barry asked me if I wanted to continue and I told him sure. I went down to the bullpen and threw and by the time the second inning began I was loose."

The Great Con of Libertarianism

Slate, via Ritholtz:

Calling yourself a libertarian is another way of saying you believe power should be held continuously answerable to the individual's capacity for creativity and free choice. By that standard, Thomas Jefferson, John Ruskin, George Orwell, Isaiah Berlin, Noam Chomsky, Michel Foucault, and even John Maynard Keynes are libertarians. (Orwell: "The real division is not between conservatives and revolutionaries but between authoritarians and libertarians." Keynes: "But above all, individualism … is the best safeguard of personal liberty in the sense that, compared with any other system, it greatly widens the field for the exercise of personal choice.") Every thinking person is to some degree a libertarian, and it is this part of all of us that is bullied or manipulated when liberty is invoked to silence our doubts about the free market. The ploy is to take libertarianism as Orwell meant it and confuse it with libertarianism as Hayek meant it; to take a faith in the individual as an irreducible unit of moral worth, and turn it into a weapon in favor of predation.
Another way to put it—and here lies the legacy of Keynes—is that a free society is an interplay between a more-or-less permanent framework of social commitments, and the oasis of economic liberty that lies within it. The nontrivial question is: What risks (to health, loss of employment, etc.) must be removed from the oasis and placed in the framework (in the form of universal health care, employment insurance, etc.) in order to keep liberty a substantive reality, and not a vacuous formality? When Hayek insists welfare is the road is to serfdom, when Nozick insists that progressive taxation is coercion, they take liberty hostage in order to prevent a reasoned discussion about public goods from ever taking place. "According to them, any intervention of the state in economic life," a prominent conservative economist once observed of the early neoliberals, "would be likely to lead, and even lead inevitably to a completely collectivist Society, Gestapo and gas chamber included." Thus we are hectored into silence, and by the very people who purport to leave us most alone.
Thanks in no small part to that silence, we have passed through the looking glass. Large-scale, speculative risk, undertaken by already grossly overcompensated bankers, is now officially part of the framework, in the form of too-big-to-fail guarantees made, implicitly and explicitly, by the Federal Reserve. Meanwhile, the "libertarian" right moves to take the risks of unemployment, disease, and, yes, accidents of birth, and devolve them entirely onto the responsibility of the individual. It is not just sad; it is repugnant.

The article is well worth the read.  We have to bring back the discussion of the common good.  Individual liberty at the expense of the general welfare becomes serfdom for the masses, Hayek's premise turned on it's head. 

More From Bill Gross

via Ezra Klein:

Bill Gross is the manager director of PIMCO, which makes him one of the most important bond traders in the world, if not the most important. And so his exit from the Treasury market a few months ago, plus his intense and very public concern over the deficit, has attracted a lot of concern. “Keep that in mind when you hear people arguing about austerity,” wrote Megan McArdle. “People like Bill Gross are the ones we ultimately need to convince, because they’re the ones whose defection will precipitate a crisis. And he’s not buying either supply-side claims that tax hikes will cause disaster, or the super-Keynesian argument that we can’t cut spending because the economy will contract so fast that we’ll actually end up with a bigger deficit.” Or so we thought. But in an unusual mid-month note to his investors, Gross hammered the “anti-Keynesians” in both parties who believe “that fiscal conservatism equates to job growth.” The truth, he says, is just the opposite. “Fiscal balance alone will not likely produce 20 million jobs over the next decade. The move towards it, in fact, if implemented too quickly, could stultify economic growth.”
Gross goes on to spend some time mocking the “ivory tower theorem” that deficit reduction will convince consumers to spend more now because they’ll worry less about taxes and service cuts later. “I know of no family,” he writes, “who, after watching the Republican candidates’ debate in New Hampshire, went out the next day and bought themselves a flat screen under the assumption that their Medicare entitlements would be cut in future years and the U.S. budget balanced.” That theory belongs “in the trash bin of theses and research aimed more towards academics than a practical remedy to America’s job crisis.”

With actual investors saying such things, do you think Republicans will respond.  I'll go with no.  Theories and beliefs are much more significant than actual results to them.  They don't care if they cripple the economy, because they can remain ideologically pure.  Screw them.  Stupidity doesn't make good ideology, or good public policy.

Naked Capitalism Link of the Day

Today's link: The Bankers Who Cried Wolf: Wall Street's History of Hyperbole About Regulation, at the Huffington Post:

Coming from all over the country, hundreds of investment bankers from financial powerhouses like J.P. Morgan gathered for dinner at the Waldorf-Astoria to discuss their shared concerns. Chief among them: The spread of investor protection laws, which they denounced as "foolish, crude and unconstitutional." Bond broker Warren S. Hayden said the laws were paternalistic and wrong in theory, arguing that they would hurt the industry by limiting the activity of securities dealers. Bank attorney Robert R. Reed called the new rules an "unwarranted" and "revolutionary" attack upon legitimate business.
That was almost 100 years ago at the inaugural meeting of the Investment Bankers Association in New York City. The group was opposed to laws passed by Kansas and other states that sought to protect investors from fraudulent sales and practices by requiring companies issuing securities to register and receive a permit before selling stocks.
These "blue sky laws" were prompted by an epidemic of securities fraud. Hucksters, who were so dishonest that it was said they would sell "building lots in the blue sky," ripped off thousands of unsuspecting farmers in the Midwest during in the first decade of the 20th century. The laws were supported by small- and community-banks and were popular with the public.
By 1913, two years after Kansas passed the first investor protection law, 22 other states passed similar regulations. An effort to enact a federal version failed amid intense pressure by Wall Street executives, who claimed that it would have a disastrous impact on the financial services industry. Bankers magazine warned that such laws would create "a nation of fools and weaklings" by protecting people against their own mistakes.
But those predictions proved mistaken. Bank profits grew in the five years after the adoption of the most stringent blue sky laws, according to research by University of Virginia School of Law professor Paul G. Mahoney. And the big national banks that opposed the laws mushroomed in size, with average total individual deposits increasing more than 25 percent from 1914 to 1916. (Much of that can also be attributed to a flood of European money amid the First World War.)

It is kind of weird to reflect back on when Kansas was the forefront of populist/progressive legislation.  Those days are long gone.  The rise of agribusiness and the virtual elimination of the small farmer have made Kansas one of the most reactionary states in the United States.  It is a damn shame that rural America has become the enabler of the greedy rich in our financial system, helping them to take over our economy and our political system to steal more and more from the average worker.  I have my theories for why this is the case, but it is extremely detrimental to our rural areas, and is paving the way for a collapse of standard-of-living for the majority of Americans from which we won't be able to recover.  The disinvestment which is ongoing in our national education system and infrastructure systems will damage our standing beyond repair.  Why is it occurring?  Because the ultra-wealthy want to keep more for themselves, and can only see in the shortest-term time frame.  This short-term thinking brought about the financial disaster we are now in the midst of, and more of the same will cripple the nation for the foreseeable future.  The financial elite have never been truthful or accurate in their predictions, they are just able to reach into the national treasury and bail themselves out.