Monday, 12 September 2011

08:41 – Yesterday, I went ahead and upgraded our Netflix account to 2-discs-at-a-time. We watch a lot of streaming stuff on Netflix, but a glance at my disc queue told me we needed to get more discs. There are about 30 discs at the top of the queue that have just released or will release this month, covering new seasons of six or seven TV series that Barbara follows, including Gossip Girl, House MD, Sons of Anarchy, Brothers & Sisters, Castle, Grey’s Anatomy, and one or two others. With the one-disc-at-a-time plan, it’d take us about four months just to get all those discs, not counting anything else we added.


The markets are expecting a Greek default, possibly as early as this week, and certainly before year-end. Given a CDS price, it’s a straightforward calculation to determine what the market estimates the probability of a default to be. Based on current CDS prices, the market estimates the likelihood of a Greek default in the short- to medium-term to be in the mid- to high-90% range.

Meanwhile, it’s pretty obvious that Germany is about to bail, so to speak, on the Greek bailout. Rather than sending more money down a rathole, Germany seems to intend to use that money to bailout its own banks, which will all be bankrupt if (when) Greece defaults. The German position seems to be that if that money must be spent, better to spend it recapitalizing Germany’s own banks than pouring good money after bad into Greece.

There is no longer any serious debate even within official EU circles that Greece will default. The questions are when and how. There has been a lot of talk about expelling Greece from the EU and the eurozone, which simply isn’t going to happen. For that to happen, the founding EU treaty would have to be modified, which would require the approval of all EU members, including Greece. Nor is there any mechanism for Greece leaving the EU and/or eurozone voluntarily. As a sovereign nation, Greece could of course simply announce its departure, but that would result in a chaotic bankruptcy.

And that is exactly the trump card that Greece holds, its only trump card. As I commented some months ago, the Greece situation reminds me of the scene in Blazing Saddles where the guy takes himself hostage and threatens to shoot himself unless everyone backs off. That is exactly the position Greece is in right now.

The thing is, at this point Greece is really immaterial to the euro crisis. Whatever Greece does or doesn’t do won’t affect events in any significant way. The real euro crisis is much, much larger than Greece. What matters are the debt crises of the larger nations, which started with Italy and Spain and have since expanded to include France and Belgium. Whether Greece departs the eurozone, voluntarily or involuntarily, those larger economies are also going down, and there’s simply no way to bail out even one of them, let alone all of them.

That’s why I’d bet that there are serious back-room discussions going on right now among the FANG nations, Finland, Austria, Netherlands, and Germany, about withdrawing from the current euro and forming a new eurozone comprising only nations with stronger economies. The cost to the FANG nations of doing that would be huge, but they pale into insignificance compared to the costs of continuing to subsidize the poor nations. A breakup of the euro is inevitable. The only question is the timing and form.


Our friends Paul and Mary were out of town over the weekend, so as usual I went over to pick up their mail and newspapers. When they had their security system installed, Paul gave me a personal numeric code for the keypad, as well as a codeword to give the monitoring service if anything ever went wrong. Fortunately.

So, yesterday I picked up their Sunday newspaper in the driveway and unlocked their front door. The system started beeping, as usual. I walked to the keypad and punched in my numeric code, as I’d done a hundred times or more before. The system went, very loudly, into intrusion mode. I stood and waiting for the alarm monitoring service person to challenge me, which she did. I gave her my verbal password, which she accepted as valid. She asked if I wanted her to call the police, and I told her no, that I was just taking care of the house for friends. I then told her what had happened, and she said I must have entered the wrong numeric code. I thought that was pretty unlikely, given that I tend not to forget numbers, but I tried it again, along with several permutations. No joy. So I asked her if she could reset the system so that I could just punch the Away key when I left. She said she couldn’t do that without permission from the homeowners and suggested I contact them. I told them that Paul and Mary had no land-line phone, that I didn’t have a cell phone, and that I didn’t know their cellphone numbers anyway. She said in that case she couldn’t help until I contacted them somehow and got them to authorize her to disable the system.

She disconnected, and I was left standing there with the alarm screaming. So I locked up the house and headed back to my house to call Paul or Mary and get things straightened out. By the time I got home, there was a phone message from Paul on our answering machine. As I was about to call him, he called me and said he’d talked to the security company and told them I was authorized to be there. He asked if I’d mind driving back over to their house and disarming the security system using their own numeric code. So I drove back over and found that the alarm was no longer sounding. Paul and Mary were already on their way back home, so I punched the disable key and entered their numeric code to turn off the system.

When Barbara got home from her parents, her only comment was that I needed a cell phone. I don’t have one now because I seldom leave the house, and the few times I do I’m usually with Barbara or a group of friends, all of whom carry cell phones. I figured if I got a cell phone, the battery would inevitably be dead any time I actually needed it, so I haven’t bothered. I suppose I should order a Boost Mobile prepaid phone, something like the Sanyo Mirro.

23 thoughts on “Monday, 12 September 2011”

  1. I used to have a T-Mobile prepaid phone. It seemed to be the best deal at the time. For $100, I got a card with 1000 minutes that lasted a year. Every time I got a new card, it was because the year was up. This was far and away the best deal of any cell phone company at the time.

  2. We use AT&T prepaid. Ten cents* per minute. $15 is good for 90 days, $100 is good for a year and if you renew before they expire the unspent amount carries over.

    As for the battery being dead, the rules I follow have kept that from happening to me. First, if I am dressed the phone is in my pocket, always. Second, when I get undressed at night and empty my pockets onto the dresser I check the charge and plug it in if it is anything less than 100%; the charger is on my dresser. If I fail to charge it the first night it is down, it will still last through the next day. A charge is good for at least five days.

    *I miss the cents sign. I’ve missed it since I started with PCs. Yes, I know some esoteric key combination will produce it, but that isn’t going to happen when I’m typing.

  3. I chose Boost Mobile because there’s no minimum. It’s a flat $0.10 per minute. Time expires after 90 days, but you can add any amount and the remaining balance will carry over. I usually add $10 every 90 days to Barbara’s phone, and she uses an average of maybe $1 or $2 per month of airtime. I think she’s up to something like a $40 balance now. I could add just $1 every 90 days and still carry over the remaining balance, but that seems a bit like taking advantage of Boost.

    I suppose that carrying the phone all the time would work, but the problem is that I’m already carrying around a cordless phone.

  4. I still use T-Mobile pre-paid. I have not done really thorough checks, but when someone has pointed me to a competing company that they thought would be cheaper, it was not cheaper, and did not include text messages. Some companies will not even pass text messages, while charging the same per-minute rate as those who do.

    Texting has actually been highly important to me, because ever since I got my first cell phone, I have had jobs where I must silence the phone (classroom teaching and video recording). I can, however, read the text messages and respond to them at appropriate times, without disrupting work. Same with communicating to others. Often they cannot answer or respond immediately, so text messages are like email–they get to it when they can.

    Americans always tell me to use the cell phone’s answering service, but wait!–you pay per minute to use that, both for the caller who leaves the message and for you to call in to retrieve it. And there have been many complaints that cell phone providers are purposely making the messages and menu options quite long, so you rack up more minutes. More than a decade ago, I worked for a company that had an answering/pager service where the calls were purposely speeded up, so telephone usage would be cut down. Do cell phone providers do that? Not on your life!

    Moreover, in Germany, texting was significantly cheaper than a phone call: when I left, a one-minute call was 50¢, whereas a text message was only 10¢. I used to be able to communicate with my kids via text internationally, but all US providers have cut that out during the last 2 years, unless you pay extra–even then, as we found out, the messages do not always get through.

    Although both my kids have been looking for plans that the 3 of us could be on, ALL the plans from the major companies start at $50/mo and even at that rate, have limitations on how many minutes you have per month before going into extravagant overtime charges. Same with texting. So-called “free” calling time is, of course, when I never need to call anyone (late nights and weekends). So far, my monthly charges have averaged $40/mo with the ability to call and text at any time, so paying $10 more for a plan with significant limitations is dumb.

    Even in the US, texting WAS cheaper than calling with T-Mobile until last month. Now the rate for a message is exactly the same as a call. Still, the fact that someone can text me with important information at the time that is convenient for them, and not have the necessity of remembering to call me again, is the main reason I no longer have a landline phone at all.

    As far as battery, I charge every Wednesday and Sunday overnights. In Germany, I could charge only once a week on Sunday overnight, but the same phone requires more juice to deal with the American system.

  5. On Windows computers, the cent sign is Alt-0162 ¢ and the degree sign for temperature is Alt-0176 °. Euro sign–which our host believes we will not need much longer–is Alt-0128 €. I put those on a post-it note until I memorized them.

  6. Oh, I think the euro will be around for a long, long time. In fact, I think it’s likely that we’ll end up with two euros, although they both may not be called that. The cold, hard northern euro will be at rough parity with the US dollar; the soft, sunny southern euro at rough parity with the US cent. Okay, maybe the US dime.

  7. Gee, I wish posts could be edited. I forgot to mention that the numbers MUST be entered from the keypad, so the above system poses problems for most laptops.

  8. What is happening in Europe right now, is exactly what the Germans want–Greece out of the EU. At this point, it would actually be beneficial for Greece to return to its own currency, because the burden they will bear would be far more onerous and go on far longer if they remain with the Euro, than if they had their own independent currency. Having to pay off most or all of the Euro loans would be worse than just returning to the Drachma and declaring bankruptcy. Argentina provides some lessons.

  9. Germany certainly would like Greece out of the euro, and I agree that Greece dumping the euro and returning to the drachma is a very real possibility. The question, again, is whether Greece jumps or waits to be pushed.

    But it’s not just Greece that Germany wants out of the euro. Germany also wants (certainly) Portugal, Spain, and Italy out, and (almost certainly) France and Belgium out. Germany would be happiest with only the FANG nations being in the euro, and perhaps the UK if Britain is willing (which they’re certainly not now and probably would not be if a northern-tier euro is created). I didn’t mention Ireland, because there is a great deal of sympathy in Germany and elsewhere for Ireland, which is perceived to have been dragged down with the deadbeat southern-tier nations through little fault of its own. Also, Ireland has been making strenuous austerity efforts, which impresses the Germans.

    As I’ve said, I think the probability that the eurozone will continue to exist in its present form by the end of 2011 is very low. Greece will exit, one way or another. That may occur within a week or so, if the lenders refuse to release the next tranche, which Germany is insisting they refuse to do unless Greece meets the terms of the agreement. Greece simply can’t do that, so if Germany has its way I expect a formal Greek default in the next week or so. Even if they do get this next €8.5 billion tranche, that’s enough to hold them only until the next tranche is due in December. The chances they’ll get that one are close to zero.

    And I see that Italy just auctioned €11 billion worth of bonds with a yield spread close to 400 basis points over German bunds. That’s even with the ECB subsidizing them, and the bid-to-cover ratio was pretty pathetic. Given the huge amount of debt that Italy (and Spain) need to refinance over the rest of this year, and given that the ECB simply cannot continue to subsidize Italian and Spanish bond yields for much longer, I expect Italian and Spanish bond yields to head for the stratosphere later this year. At that point, they’re toast.

  10. They now make cordless phone sets that interface via Bluetooth with your cell phone. You simple pair your cellphone, set it next to the base station, and can pick up using the cordless system anywhere in the house/garage.

    All hearsay, by the way. I was researching it for a friend last year, and she never did get the system (Panasonic units seemed to have the best reviews at that time).

  11. Italy is really the only significant problem other than Greece. I am quite sure the Germans believe they can handle things if Greece is out. Spain’s GDP is respectable and growing; Italy is a favorite travel destination for Germans, so they will give Italy more leeway than Greece. Portugal and Ireland both got caught by the US financial debacle, but both have trimmed the sails and are on course to correction.

    IMO, regardless of the name “The Great Recession”, it was not really that. The banks caused trillions in investment capital to be lost overnight. There was no recession. In 2007, everyone in the US was forced to begin stepping back to the scale of 1992. People kept spending, but volume dropped back to 1992 levels, and that looked like a recession. Most economists who did not see the bubble forming, still do not realize what has happened. There will not be a magic return to 2007 pre-crash levels any time soon. It will happen slowly over long years, as that lost capital is earned again.

    But the worst thing that could happen, is if there really IS a recession–what some will then call a “double-dip”. I think it is unlikely to happen in the US, but the EU is a different story. Up until a couple months before I left at the end of 2009, Germany was completely unscathed by the US crisis. And even then, the only companies pulling in the purse-strings were those with significant US holdings. But if the EU suffers a recession, then I think that will also infect the US–and then we really could be in for difficult times.

    But commerce has been–and is–continuing. Deals are still being done. Widgets are being made, bought, and delivered. I am getting progressively more work. I do not see that changing, either here or in the EU–barring an EU recession. But Greece is done for. At this point, there is no way out for them–except to withdraw. The rest of us are on the road from 1992 to 2007. Again.

  12. I used to be able to communicate with my kids via text internationally, but all US providers have cut that out during the last 2 years

    Our exchange students in the US send a text to an email account of their friends in Germany. The person in Germany responds to the email and it is sent to the cell phone of our exchange student. Fairly quickly I might add.

    I pay almost $200.00 a month for cell phone service. My son contributes to part of that expense. We have 3 cell phones with unlimited texted and two Droids with the unlimited data plan. In April of next year we will be down to 4 cell phones but that will only save $10.00 a month.

    We also unlimited calling between 9:00P and 7:00A. Outside of those hours we have 700 minutes that we can use among all the phones. Along with that we have unlimited calling as long as we stay within the network.

    One advantage of texting is when the cell networks are overloaded and calls cannot be connected. It has been found that text messages almost always make their way through the system. A good reason in my opinion to have texting in some form such as unlimited, prepaid or pay as you go. In time of criticial situations a quarter for a text message to tell your family your OK is worth it. Although for some members of my family I would still question that value.

  13. It’s weird… I’ve had the opposite experience with SMS vs phone calls. I’ve often had SMS messages delayed by days, while phone calling reliably gets through to the person’s phone.

  14. I’m a deep, undercover spy so every day I start with a brand new, untraceable cell phone that I buy with the minutes already built-in, then toss into the ocean of the end of the Huntington Beach pier each evening.

  15. Italy is indeed a huge problem. Under Berlusconi, institutional corruption – which was improving – has once again become firmly entrenched. The mafia is regaining strength. The spoils system is firmly in place – as an example: they spend three times as much on cars for federal officials as they do on their entire national train system. In short, Berlusconi is dragging Italy back into second-world status. If he bankrupts his own country, that’s ok, because he and his cronies will still have money and power.

    In one sense, Italy reminds me of the USA: the media has incredible power combined with incredible bias. In Italy, the media is largely controlled by Berlusconi and used to further his own ends – the world view presented to the average Italian is very skewed. In the USA, no single person controls the media; rather, most of the MSM seems to be dominated by a self-annointed elite dedicated to Ivy League do-gooder, government-is-here-to-help liberalism.

  16. I spent a few days in northern Italy in the mid Nineties, as part of a coach tour focused on Switzerland and Austria. When we crossed the border into Italy there was an immediate and obvious fall in the quality of houses and infrastructure. The railway station in one town had a rusting galvanised iron roof. But that was *northern* Italy. I’m told things are much worse down south.

  17. It’s a cultural/religious thing. Countries that have historically been Protestant are wealthier than countries that have historically been RC or indeed OC. A distant second factor is natural resources, but that’s insufficient to explain even a small fraction of the differences. Look at economic development and government in the northern tier versus the southern tier since the Reformation, and the data are pretty consistent. Even within countries, the distinction is usually pretty obvious. Look, for example, at predominantly Lutheran northern Germany versus predominantly RC Bavaria, or look at Ireland versus the rest of the UK. When priests are in control, nations suffer.

  18. Ah, but the food in northern Italy cannot be beat! Perhaps the best I have had anywhere.

  19. Regards the difference in Germany, wages are–for some reason–higher in the south than the north. Jeri and I could teach English for almost twice as much if we were willing to move to Munich or Frankfurt am Main. But they wanted to pay us almost half in Magdeburg or Hamburg. Prices in the south are higher, too. A Döner Kebap was a good 50¢ more in the south than the north. Döners were always my test for relative cost-of-living while in Germany. Berlin seemed to be the cheapest of anywhere we visited.

  20. Btw, I also had trouble with text messages arriving timely–but that was in Germany only. It was only a couple of messages over the years. No problems at all in the US.

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