Greece on the edge of the abyss

It's now looking as though Greece could be in default at any time. Those delicious-looking interest-rate swaps that they entered into with Goldman Sachs ["I'll just have one more!"] may be about to come back and bite them in the tail even more firmly than we thought.

Zero Hedge has an article revealing that one more credit rating downgrade either for Greece itself or (and even more easily done) for the legal vehicle which it used to execute the deal, will trigger an obligation to pony up collateral. Which Greece probably won't be able to do, and if it can't, it's going to default, and if it defaults there it's not going to be able to roll over any other debts and then it's going to default everywhere. Poof! Bye-bye Greece.

I can't say I'm very surprised. I visited Greece for two weeks about twenty years ago; one week in Athens for work, another tacked on the end to take a classical tour of the whole country. I went there with my head full of foolish and romantic notions about the birthplace of democracy, theatre, poetry and the arts, architecture, rosy-fingered dawn over the Parthenon, mount Olympus and the wine-dark sea. That had all been knocked out of me by the end of the third day.

Even then, two decades ago, it was impossible for someone recognisablly a foreigner [i.e. me] to sit and eat at a table outside a restaurant in Athens without being continually bothered by shady-looking men coming up and asking if I wanted to go to a club and meet girls. And I mean continually. Every ten or twenty minutes. I also remember reading an English-language Greek newspaper and seeing a report of one of the national politicians praising membership of the EU on the grounds that Greece would be able to squeeze every last drop of regional and structural grants and then spend it all on whatever they wanted.

All rather depressing, and now it seems we're at the far end of that arc. EU funds, and latterly membership of the Euro (and all lubricated by endemic greed and corruption) have done for Greece what the curse of oil has done elsewhere, and now it's time to pay the piper. I'd like to be glad at least that it probably means that Greek property will be cheap in a couple of years, but the truth is that any foreigner who buys property in Greece is likely to be seen as a piggy bank by local officials and politicians, there to be raided whenever the need for cash demands it.

Maemo + Moblin = MeeGo

So Intel has finally thrown in the towel on creating its own mobile platform based on Linux. Disguised, naturally, as a triumphant victory, uniting its Moblin product with Nokia's Maemo so that together they may go onwards to storm the bastions of Android and iPhone. But everyone can see that MeeGo, the combined offering, will really be Maemo with a few extra bells and whistles. Most imortantly from a developer viewpoint, the development API remains Maemo's Qt — which is absolutely right, there's nothing else as good around.

The name change is a shame though. "Maemo" feels vaguely Nordic with its echoes of Mimir, Aesir, Ymir and so on. MeeGo? Fresh out of the marketing department's paper shredder if you ask me. The best thing independent developers can do is ignore the name change and stick with calling it Maemo. Or, alternatively, I think I like the sound of "Haemogoblin".

A new use for the Zimbabwe dollar

This image has been doing the rounds of the economics and investment blogs lately, and so of course I can't pass by without adding my six penny [or 144 Zimbabwe Dollars—ed.] worth.

It's rather spoiled by the fact that, apparently, Zimbabwe is now experiencing deflation, after switching its economy to using a basket of world currencies rather than the old Zimbabwe dollar, but let's cast our minds back a year, or preferably two.

The first observation is that, like any commodity, toilet paper has a price. In finis, even a single sheet of toilet paper has a price. Let's say that this price was at one time one Zim$. Now let time pass (and not necessarily very much time) and we see that the price of a single sheet of toilet paper is 10 Zim$. Now, remembering your Structuralism, what little squiggles on the dollars do is establish a relationship between two of these pieces of paper such that one of them is worth ten times as much as the other. The obvious conclusion, assuming for a moment that Zim dollars and pieces of toilet paper are perfectly fungible, is that by applying ink to a piece of paper, the Zimbabwe government has actually destroyed 90% of its value.

Sentence of the day

"Deflation in a fractional reserve banking system means policymakers have, for all intents and purposes, lost control of the economy."

Difficult to argue with that one, whatever you may think of the rest of the author's argument.

Gaddafi preaches to Rome beauties

Another airy, breezy little piece from the BBC. Apparently Col. Gaddafi rounded up 200 young Italian women, in Rome, home of the Catholic church and one of Christianity's holy cities, and harangued them for two hours on the wonders of Islam, urging them to convert.

Of course, the BBC does its best to tell the story in a laugh-a-minute style (that Gaddafi, what a card!) But I wonder what headlines we'd be looking at now if a Western leader had seen fit to go to Mecca and round up 200 women and urge them to convert to Christianity? Flag burning? Riots? The looting of Christian quarters in certain middle-eastern cities? Ancient Catholic nuns in faraway places having their heads chopped off by enraged crowds? All of that, I fear. And the BBC's tone — well it would be rather different.

Best sentence read today

"The good news out of the bad news is that because money [currently] has no velocity, we have no inflation."

(Brackets mine.) From CNBC's A Conversation with Art Cashin, UBS.

Governments have turned the printing presses on but the banks are not lending for economic activity. Instead, all that money is propping up real estate prices and powering another bubble on the stock markets.

Word of the day: Externalities

OK this isn't exactly a new word, I've come across it many times without ever being sufficiently bothered to look up its exact meaning. That's often an acceptable modus operandi when you can make a believable (if only to you) guess at a word's meaning, but that's something I never really managed to do with "externalities" — the best I managed was that it referred to something nasty.

So here's a definition from Paul Krugman, no less, in a recent article in the New York Times: "externalities — costs that people impose on others without paying the price, like traffic congestion or pollution." So now I know.