A Yahoo report from the UK, where there are so many fascinating stories:

Beck Laxton, 46, and partner Kieran Cooper, 44, have spent half the decade concealing the gender of their son, Sasha. “I wanted to avoid all that stereotyping,” Laxton said in an interview with the Cambridge News. “Stereotypes seem fundamentally stupid. Why would you want to slot people into boxes?…Sasha dresses in clothes he likes — be it a hand-me-downs from his sister or his brother. The big no-no’s are hyper-masculine outfits like skull-print shirts and cargo pants.

In one photo, sent to friends and family, Sasha’s dressed in a shiny pink girl’s swimsuit. “Children like sparkly things,” says Beck. “And if someone thought Sasha was a girl because he was wearing a pink swimming costume, then what effect would that have?”…

When Sasha turned five and headed to school, Laxton was forced to make her son’s sex public. That meant Sasha would have to get used to being a boy in the eyes of his peers. Still, his mom is intervening. While the school requires different uniforms for boys and girls, Sasha wears a girl’s blouse with his pants.

Makes us want to play matchmaker. Look, almost anything’s better to comment on than the drip, drip, drip of the primary season, or the appalling situation in Washington.

George Will:

In 2009, the net worth of households headed by adults ages 65 and older was a record 47 times that of households headed by adults under the age of 35 — a wealth gap that doubled just since 2005. The equalizing effects of redistributive transfer payments are less today than in 1979, when households in the lowest income quintile received 54 percent of such payments. In 2007, they received 36 percent.

It’s as though we have an intergenerational Treaty of Versailles, and the young are stuck with the war reparations. The problem is: there aren’t enough of the young to do so. Trouble ahead.

VDH discusses the military budget:

The drawdown is not occurring in a vacuum, but is the bookend of a loud new ‘reset’ / ‘lead from behind’ strategy that deprecates traditional allies like Britain and Israel while failing miserably in outreach to supposedly new neutrals like Syria and Iran — all in a landscape of bowing, apologizing, and Cairo speechifying. All of these developments serve as force multipliers to the military retrenchment and confirm the impression of our enemies that the world is now entirely negotiable in a way not true four years ago.

The unspoken irony is that the military and our anti-terrorism protocols served Obama well when he arrived: he found a quiet Iraq with almost no monthly American casualties, a decimated al Qaeda (largely destroyed in Iraq), anti-terrorism measures that had foiled over 30 plots against the mainland (and were all demagogued by candidate Obama before President Obama embraced them), major powers like China, Russia, and Iran wary of pressing the U.S., allies like Japan, Taiwan, Germany, and South Korea secure under the U.S. nuclear umbrella, and the most seasoned and experienced U.S. military in generations…

The new $500 billion cuts must be considered against the nearly $5 trillion Obama has borrowed since assuming office, in addition to what he will borrow this next year. A defense budget that was tolerable prior to 2008 becomes apparently unsustainable with expenditures for Obamacare, vast new green projects like Solyndra, expansions in food stamps and unemployment insurance, and vast increases in the size of the non-military federal government. At least with the military our money earns safety and deterrence

The college professor continues his work. It’s as though the country elected not Jimmy Carter, but George McGovern. In any event the choice couldn’t be clearer this year. An America that might choose a McGovern administration is both unfathomable to us and, sadly, possible.

Telegraph:

The Guardian’s front-page headline this morning was ‘NHS cuts have affected patient care say four out of five doctors’. So just how severe are these ‘cuts’? Ten per cent of the budget? Five? Here are the official figures from the Department of Health. At a time when other ministries are indeed under pressure, spending on the NHS will continue to grow year on year throughout the parliament – as it has almost uninterruptedly since 1948. Expenditure will rise from £103.8 billion to £114.4 billion in 2015. It’s true that, once inflation is factored in, the increase is slight – around 0.4 per cent. It’s true, too, that there is a reallocation of funds within that budget from administration to the actual provision of healthcare. Still, in no system of mathematics does this represent a ‘cut’. What, then, is the Guardian talking about? Read far enough and you’ll see that the whole story is based an online survey of, er, 664 self-selected respondents

Middle East Forum:

Consider the New York Times’ coverage, as reported by Adam Nossiter, in an article titled “Nigerian Group Escalates Violence With Church Attacks”: The sect, known as Boko Haram, until now mostly targeted the police, government and military in its insurgency effort, but the bombings on Sunday represented a new, religion-tinged front, a tactic that threatens to exploit the already frayed relations between Nigeria’s nearly evenly split populations of Christians and Muslims…

This sentence is fraught with problems. For starters, Boko Haram has been terrorizing Nigerian Christians for years, killing thousands of them, and destroying hundreds of their churches. Considering that just last Christmas Eve, 2010, Boko Haram bombed several churches, killing nearly 40 Christian worshippers, the New York Times’ characterization of these latest attacks as “represent[ing] a new, religion-tinged front” is not only unconscionable, but unprofessional.

Boko Haram — whose full name in Arabic is “People of Sunna for Da’wa [Islamization] and Jihad [Holy War]” — has, for a decade, been representing a very “religion-tinged front,” that is, an Islamic front, one that is hostile to all things non-Muslim, with Christians at the very top. In just the last couple of months, Boko Haram has carried out attacks on dozens of other churches, bombing some, torching others. In one instance, they opened fire on a congregation of mostly women and children, killing dozens; they executed two children of an ex-terrorist because he converted to Christianity

A cut is properly defined as an inadequate increase. A clear religious-political strategy of violence is properly defined an unfortunate religion-tinged tactic that might result in some random man-caused disasters. What about clear writing don’t these whiners understand?

Mark Steyn:

Greece has a spending problem, a revenue problem, something along those lines, right? At a superficial level, yes. But the underlying issue is more primal: It has one of the lowest fertility rates on the planet. In Greece, 100 grandparents have 42 grandchildren – i.e., the family tree is upside down. In a social democratic state where workers in “hazardous” professions (such as, er, hairdressing) retire at 50, there aren’t enough young people around to pay for your three-decade retirement. And there are unlikely ever to be again.

Look at it another way: Banks are a mechanism by which old people with capital lend to young people with energy and ideas. The Western world has now inverted the concept. If 100 geezers run up a bazillion dollars’ worth of debt, is it likely that 42 youngsters will ever be able to pay it off? As Angela Merkel pointed out in 2009, for Germany an Obama-sized stimulus was out of the question simply because its foreign creditors know there are not enough young Germans around ever to repay it. The Continent’s economic “powerhouse” has the highest proportion of childless women in Europe: one in three fräulein have checked out of the motherhood business entirely. “Germany’s working-age population is likely to decrease 30 percent over the next few decades,” says Steffen Kröhnert of the Berlin Institute for Population Development. “Rural areas will see a massive population decline, and some villages will simply disappear.”

If the problem with socialism is, as Mrs. Thatcher says, that eventually you run out of other people’s money, much of the West has advanced to the next stage: it’s run out of other people, period…

In Italy, the home of the Church, the birthrate’s somewhere around 1.2, 1.3 children per couple – or about half “replacement rate.” Japan, Germany and Russia are already in net population decline. Fifty percent of Japanese women born in the Seventies are childless. Between 1990 and 2000, the percentage of Spanish women childless at the age of 30 almost doubled, from just over 30 percent to just shy of 60 percent. In Sweden, Finland, Austria, Switzerland, the Netherlands and the United Kingdom, 20 percent of 40-year old women are childless. In a recent poll, invited to state the “ideal” number of children, 16.6 percent of Germans answered “None.”

In China and India, the birthrate of boys to girls is as high as the unnatural ratio of 1.2-to-1, a formula for mischief up to and including war. So Western Europe is broke and disappearing, and the two largest countries on the planet are overdosing on testosterone. We don’t know what this adds up to, but it doesn’t look too good.

Stratfor discusses the latest eurozone liquidity measure:

The ECB has drastically lowered its standards for the collateral it accepts for these loans, so banks get to offload some very risky assets. The cash they’ll receive will generate a superficial improvement for banks — cash is considered the least risky asset to hold. But to move beyond a temporary solution banks have to lend the cash out in order to generate earnings. The cash itself would not earn enough interest to repay the 1 percent rate on the loans.

One of the most talked-about options for generating profits would be buying more European government bonds. European politicians and other advocates of this plan paint it as a win-win scenario. Banks generate earnings by purchasing higher yielding sovereign debt, such as Spain’s or Italy’s

So the ECB is accepting compromised collateral, possibly at par, and may encourage the banks to buy even more compromised debt. That’ll work! We flash back three years to the dark days of late 2008. The de-leveraging process still has a long way to go, and the can is still being kicked down the road.

AP:

banks snapped up €489 billion ($639 billion) in cheap loans from the European Central Bank on Wednesday, a sign of just how hard or expensive it has become to borrow from each other. The huge demand for newly available three-year loans comes as fears rise that heavily indebted European governments could default and force banks and other bond holders to take big losses…

The loans to 523 banks surpassed the €442 billion ($578 billion) in one-year loans extended in June 2009, when the global financial system was reeling from the collapse of the U.S. investment bank Lehman Brothers. It was the biggest ECB infusion of credit into the banking system in the 13-year history of the euro. The ECB wants banks to use the money to help pay off or refinance some €230 billion ($300 billion) in existing loans early in 2012…

it was far higher than the €300 billion ($392 billion) expected…”The good news is, the ECB’s efforts to increase liquidity are working,” said Jennifer Lee, an analyst at BMO Capital Markets. “The bad news is, high demand for the loans creates worries that banks are urgently in need of funds to boost liquidity.”

Let’s do some arithmetic. Much of the €489 billion goes to refinance some €230 billion coming due next month. So there’s €259 billion of net additional liquidity spread among 523 banks. Not that much on a per bank basis, but the largest amounts are no doubt concentrated in the largest institutions.

Still, this is a drop in the bucket, compared to some estimates of the needs of the banking system, and it does nothing at all to deal with the €2.6 trillion sovereign debt problem. Question: what happens when the debts begin to mature and liquidity starts coming out of the system?

Robert Samuelson:

The eclipse of Keynesian economics proceeds. When Keynes wrote “The General Theory of Employment, Interest and Money” in the mid-1930s, governments in most wealthy nations were relatively small and their debts modest. Deficit spending and pump priming were plausible responses to economic slumps. Now, huge governments are often saddled with massive debts. Standard Keynesian remedies for downturns — spend more and tax less — presume the willingness of bond markets to finance the resulting deficits at reasonable interest rates. If markets refuse, Keynesian policies won’t work.

Countries then lose control over their economies. They default on maturing debts or must be rescued with loans from friendly countries, the International Monetary Fund (IMF), government central banks (the Federal Reserve, the European Central Bank) or someone. There are other reasons why Keynesian policies might fail or be weakened. But they pale by comparison with the potential veto now posed by bond markets. Ironically, the past overuse of deficits compromises their present utility to fight high unemployment.

There is no automatic tipping point beyond which a country’s debt — the sum of past annual deficits — causes bond markets to shut down. But Greece, Portugal and Ireland have already reached that point, with gross debt in 2011 equal to 166 percent, 106 percent and 109 percent of their national incomes (gross domestic product), according to IMF figures. Heavily indebted Italy and Spain could lose access to bond markets…

In 2012, the American budget deficit is projected at 7.9 percent of GDP; Greece’s is 6.9 percent; Italy’s 2.4 percent. In 2012, U.S. government borrowing — the deficit plus renewing maturing debt — is estimated to be 27 percent of GDP; Greece’s is 24 percent; Ireland’s 19 percent. On the plus side, the U.S. debt-to-GDP ratio is smaller than Europe’s worst. Also, a “safe haven” effect — reflecting the size of the U.S. economy and past political stability — contributes to America’s good fortune…

Americans seem to think they’re invulnerable to a bond market backlash. Economist Barry Eichengreen, a leading scholar of the Great Depression, is dubious: “Given low interest rates and the still-weak U.S. economy, it will be tempting for the U.S. government to continue running deficits and issuing additional debt. At some point, however, investors will recognize this behavior for the Ponzi scheme it is…If history is any guide, this scenario will develop not gradually but abruptly.”

We left out the parts where Samuelson tries to add balance to his article by citing the other side. It’s as though he wrote the piece for the edification of his fellow writers at the Washington Post who continue to believe that arithmetic doesn’t matter and that unfinanceable deficits are financeable if only we click our heels together three times. What part of EU can’t they understand? More evidence that even failed religions die hard.

Ambrose Evans-Pritchard in the Telegraph (here and here):

a flim-flam treaty? The deal is not a “lousy compromise”, said Angela Merkel. Well, actually that is exactly what it is for eurozone politicians searching for a breakthrough. It tarts up the old Stability Pact without changing the substance (although there will be prior vetting of budgets). This “fiscal compact” is not going to make to make the slightest impression on global markets, and they are the judges who matter in this trial by fire…

there is more discipline for fiscal sinners, but without any transforming help…There is no shared debt issuance, no fiscal transfers, no move to an EU Treasury, no banking licence for the ESM rescue fund, and no change in the mandate of the European Central Bank…there is no breakthrough of any kind that will convince Asian investors that this monetary union has viable governance or even a future…

the disaster was caused by current account imbalances (Spain’s deficit, and Germany’s surplus), and by capital flows setting off private sector credit booms. The Treaty proposals evade the core issue…

Europe will now have its austerity union, a revamped Stability Pact. Budgets will be vetted “ex ante”. Structural deficits will be capped at 0.5pc of GDP. Sinners will be punished automatically once they break the 3pc limit, and submit to suzerainty. Commissars will tell them how to treat trade unions, what to tax, and what to spend.

It is not remotely a fiscal union. There will be no joint debt issuance, no EU treasury, no shared budgets, and no fiscal transfers to regions in trouble. “The agreement hard-wires pro-cyclical fiscal austerity into the institutional framework of the eurozone, with no quid quo pro to move gradually to debt mutualisation.” said Simon Tilford from the Centre for European Reform.

As they rush from crisis to crisis, the Eurocrats don’t seem to be thinking of second and third order effects of what they are doing. (Let’s leave aside for the moment that the money may not be close to enough, and that the proposals don’t really have much to do with appeasing markets, since they apparently don’t like or care about markets much.)

What do you suppose happens if southern Europe has perennial austerity budgets imposed by Germany and France: (a) riots and civil unrest; (b) large migrations from the Hooverville countries to northern europe and hence unrest in the north; (c) things even worse than (a) and (b)? Final point: all this rushing around and there is no treaty — a first draft won’t be available until next week. What a mess.

Nile Gardiner in the Telegraph responds to Paul Krugman’s advice to the eurozone to increase government spending even further than it already has done:

the major European economies that are now in trouble have two things in common: membership of the eurozone and staggering public debts. According to IMF figures, Greece’s gross government debt as a percentage of GDP (2011 forecast) stands at 165.6 percent, up from 105.4 percent in 2007. Italy’s government debt now stands at 121.1 percent of GDP, up from 103.6 percent in 2007. Portugal’s debt has risen from 68.3 percent of GDP in 2007 to 106 percent in 2011. Even the EU’s second biggest economy, France, is not immune from the debt crisis. France’s government debt is now at 86.9 percent of GDP, up from 64.2 percent four years ago.

And the United States is in an even worse situation — with gross government debt as a percentage of GDP standing at a towering 100 percent, a dramatic increase from the 2007 level of 62.3 percent.

The long-term impact of this debt, both for America and for Europe, will be devastating unless spending is dramatically slashed, entitlement programs are reformed, and public sector work forces are significantly trimmed. The cradle-to-grave welfare states that dominate the social landscape of most European Union countries will ultimately have to be dismantled. The huge public debts will make economic growth increasingly difficult, have an unsettling effect on the markets, and drive down the confidence of the credit rating agencies. As The Telegraph reports today, all 17 eurozone members now face losing their Standard and Poor’s AAA credit status.

The current EU debt crisis should be a dramatic wake-up call for political elites on both sides of the Atlantic to reverse the tide of big government

Meanwhile, back at the NYT: “Although Europe’s leaders continue to insist that the problem is too much spending in debtor nations, the real problem is too little spending.”

It’s funny. On issue after issue, the conventional wisdom of those at the NYT makes no sense at all — and its adherents are so smug. Take the Paul Gregory response to the Bill Keller article of the other day. Change “economic policy” to “global warming” or “cap and trade” and it’s the same dismissive tone to those who disagree with the Grey Lady.

This graph is hard to read but it is worth focusing on. The black line is the ratio of employment to population. The percentage is to the left of the graph. It has stabilized at around 58.5%, though it is way below the peak of 64% in the late 1990′s. During the last decade, construction, technology, finance and service industries added jobs, but the US shed 7-8 million manufacturing jobs. Part of that makes sense, but is it really necessary that we now have 166,000 fewer jobs in the computer industry than we did in 1975, when the first PC shipped?

Stratfor:

Italian bond yields continue to climb to new euro-era records, with bonds sold within the past two days going at 7.89 percent — a level at which Greece, Ireland and Portugal were all forced to seek bailouts. Italy has a stronger financial position and more domestic capital than the eurozone’s three bailout states, but there is still an upper limit to what Rome can afford…

Europeans are searching for a means of containing Italy’s troubles. The threat is clear. An Italian default would rip apart the eurozone even if it did not trigger a financial cascade — and a financial cascade would pretty much be a given. One of the solutions that is supposedly being crafted involves bringing in the IMF to bail out Italy…

Italy isn’t just facing an immediate funding crunch like most IMF wards. It has a preexisting debt stock that’s about 120 percent of GDP — it’s unserviceable, and Italy faces billions in maturing debt that must be refinanced on a monthly, and sometimes even a weekly, basis — 300 billion in refinancing needs in the first half of 2012 alone…

the IMF simply does not have the resources to bail out Italy, much less the eurozone as a whole. The IMF’s entire financial reserves are slightly under $400 billion (about 300 billion euro). Any credible remediation program for Italy would need to be in the range of 800 billion euro, and that’s before taking into account the costs of recapitalizing Italy’s banks.

Stock rallies continued in the wake of the coordinated actions of central banks to provide liquidity to the banking system. But we still don’t see how the numbers add up to a real solution.

Bloomberg:

central banks led by the Federal Reserve lowered the cost of emergency dollar funding for financial companies in a global effort to ease Europe’s sovereign-debt crisis. The new interest rate is the dollar overnight index swap rate plus 50 basis points, a half percentage-point cut, and the program was extended by six months to Feb. 1, 2013, the Fed said today in a statement in Washington. The Fed coordinated the move with the European Central Bank as well as the Bank of Canada, Bank of England, Bank of Japan, and Swiss National Bank…Two hours before the Fed announcement, China cut the amount of cash that the nation’s banks must set aside as reserves for the first time since 2008. The level for the biggest lenders falls to 21 percent…

The six central banks also agreed to create temporary bilateral swap programs so funding can be provided in any of the currencies “should market conditions so warrant.” Those swap lines were also authorized through Feb. 1, 2013…

While today’s move by the six central banks is likely to ease tensions in money markets, it falls short of some calls for the ECB to step up and act as lender of last resort for the governments of the 17-member euro area and buy unlimited amounts of government bonds. Germany, Europe’s largest economy, has resisted the idea, arguing it isn’t the ECB’s job to do so and would only be a temporary fix…

The cost for European banks to fund in dollars rose to the highest levels in three years today as concerns about a possible breakup of the euro area increased after leaders said they’d failed to boost the region’s bailout fund as much as planned…Jens Sondergaard, senior European economist at Nomura International Plc in London. “But are liquidity injections a game changer when the heart of the problem is in European sovereign debt markets?”

The action by the central banks was meant to address the interbank funding issues discussed the other day by Oliver Sarkozy. Whether it is enough remains to be seen, and of course these actions do nothing to solve the sovereign debt issue, said to require a $3 trillion solution which is less than half funded at this point.

Earlier this year in the WSJ:

TARP was created in 2008, with its Capital Purchase Program set up for banks hurt in the financial crisis. Through the repayments announced Wednesday, as well as dividends and interest, taxpayers have recovered about $244 billion of the $245 billion in TARP funds disbursed to banks, the Treasury said. The Treasury currently estimates that bank programs within TARP will ultimately provide a lifetime profit of nearly $20 billion to taxpayers

We found the numbers discussed about Euro-TARP to be mind-boggling, and indeed they are. But it is important to keep in mind that the investments in preferred stock of US financial institutions were temporary and were designed to make sure that interbank lending could continue — the sine qua non of a functioning world economy. TARP was not designed for this purpose, but it was a good and necessary idea in the dark days of 2008 after the idiotic Lehman decision by Hank Paulson. Those who predicted that TARP would turn out to be not only necessary but profitable were right after all. We hope things work out as well in Europe.

Train wreck or sinking ship, this looks like trouble. Telegraph:

As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible. Diplomats are preparing to help Britons abroad through a banking collapse and even riots…Britain is now planning on the basis that a euro collapse is now just a matter of time. “It’s in our interests that they keep playing for time because that gives us more time to prepare,” the minister told the Daily Telegraph…

Diplomats have also been told to prepare to help tens of thousands of British citizens in eurozone countries with the consequences of a financial collapse that would leave them unable to access bank accounts or even withdraw cash…

The EU treaties that created the euro and set its membership rules contain no provision for members to leave, meaning any break-up would be disorderly and potentially chaotic. If eurozone governments defaulted on their debts, the European banks that hold many of their bonds would risk collapse. Some analysts say the shock waves of such an event would risk the collapse of the entire financial system, leaving banks unable to return money to retail depositors and destroying companies dependent on bank credit.

When will the musicians begin playing Nearer My God to Thee?

Jeremy Warner argues in the Telegraph that the eurozone authorities have gone past the point of no return through a series of strategic errors, including

forcing banks to mark their sovereign debt to market. This may only have recognised the reality, but it also destroyed the concept of the “risk free asset”, forcing banks for the first time to apply capital to their sovereign debt exposures. Unsurprisingly, they stopped buying sovereign bonds, again making it harder for governments to fund themselves.

But perhaps the biggest sin of the lot was effectively to render all credit default swaps (a form of insurance against default) on sovereign debt essentially worthless, or void, by making the Greek default “voluntary”. This has made it impossible to hedge against eurozone sovereign debt purchases, and thereby destroyed the market. Worse, it’s made investors believe that the euro cannot be trusted, that it’ll repeatedly find ways of reneging on contract. That’s the point of no return. This is no longer a serious currency.

This last point is one we’ve previously not heard of, but it sounds pretty bad. The WaPo says that “investors will be carefully watching scheduled auctions of Italian bonds on Monday and Tuesday and Spanish bonds on Thursday,” and says good demand could bolster prospects for the euro. If Oliver Sarkozy’s calculations are even remotely in the ballpark, a train wreck looks imminent.

Oliver Sarkozy on CNBC via zerohedge:

The math i’m working with is very simple. In the US banking sector, we had 3 trillion of wholesale funding that needed to be stabilized, got stabilized by the implementation of TARP which saw the US treasury buy $212 billion worth of preferred in the banking sector to stabilize that $3 trillion, give our banks the time to work through their problem assets.

In Europe, that $3 trillion is $30 trillion. so if you multiply the $212 by 10, you get the $2.12 trillion. In my view, the issues on the European banks are bigger than the issues on the books of the US Banks. So if you want to stabilize that $30 trillion and in my view it’s not that you want to, it’s that you have to, you do not have a choice, you’re going to have to be at least at 2.1 trillion and i suspect it may need to be more.

These numbers are disturbing, indeed, mind-boggling. First, let’s focus on sovereign debt matters. There’s a $1.4 trillion fund that’s been set up to deal with those issues, but it is not fully funded, and advisers to Angela Merkel have said that the real need is more like $3 trillion. But that’s not what Sarkozy is talking about — he’s talking about an additional $3 trillion in a Euro-TARP to bail out the banks. So we’re at $6 trillion and counting.

As for the bank bailout, Sarkozy said “if you want to stabilize that $30 trillion and in my view it’s not that you want to, it’s that you have to, you do not have a choice.” He’s right about that. There is no choice. There is no commerce possible in the world if banks are afraid to lend overnight money to each other — the $30 trillion is apparently interbank lending, guarantees, CDS’s, etc. (Hopefully he’s wrong about the $30 trillion number, but he’s a pretty knowledgeable fellow. If $30 trillion is the number, then major structural changes are needed so that this never happens again.)

We’ve already seen what the alternative to a bailout is, and it is unacceptable. The global flow of funds simply stopped after the US let Lehman Brothers cease operations on September 15, 2008. Having a non-functioning banking system is how a recession turns into a depression, and we’ve seen that play out before as well. So logic says that there will be bailouts of the magnitudes described above. We only have one question: where’s the money going to come from?

Reuters:

Italy paid a record 6.5 percent to borrow money over six months on Friday and its longer-term funding costs soared far above levels seen as sustainable…The auction yield on the six-month paper almost doubled compared to a month earlier…Yields on two-year BTP bonds soared to more than 8 percent in response, a euro lifetime high, despite reported purchases by the European Central Bank.

Italy’s sovereign debt is $2.6 trillion or 119% of GDP, almost as bad as Greece. They’ve been kicking the can down the road but we seem to be near the end of that now.

Telegraph:

EU bans claim that water can prevent dehydration…EU officials concluded that, following a three-year investigation, there was no evidence to prove the previously undisputed fact. Producers of bottled water are now forbidden by law from making the claim and will face a two-year jail sentence if they defy the edict…

professors Dr Andreas Hahn and Dr Moritz Hagenmeyer…compiled what they assumed was an uncontroversial statement in order to test new laws which allow products to claim they can reduce the risk of disease, subject to EU approval. They applied for the right to state that “regular consumption of significant amounts of water can reduce the risk of development of dehydration” as well as preventing a decrease in performance.

However, last February, the European Food Standards Authority (EFSA) refused to approve the statement. A meeting of 21 scientists in Parma, Italy, concluded that reduced water content in the body was a symptom of dehydration and not something that drinking water could subsequently control.

Just how many millions of euros were spent on conferences in Parma and other things for a “three-year investigation” of whether water is wet? Niall Ferguson may well be right.

One, Two, Three is airing on TCM. It stars James Cagney as a Coca Cola executive in Berlin just prior to the construction of the Berlin Wall. It’s hilarious if you are of a certain age, and it caricatures both America and the Soviet bloc well. After about an hour of watching it, we became aware of its shortcoming: the East Germans are all funny. The movie was made in a free country, and it makes light of the terrible reality of living in a the Societ bloc where making such a satire would be punishable by a long prison sentence. The central fact of the movie is that Billy Wilder never could have made it on the wrong side of the Brandenburg Gate.